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Daily Newsletter, Friday, 10/05/2001

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PremierInvestor.net Newsletter          Weekend Edition 10-05-2001
                                                    section 1 of 3
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In section one:

Market Wrap: Financial weak, but broader market end positive
Market Sentiment: Tax relief talk turns the markets around
Play-of-the-Day: Tenet Healthcare - THC (Bullish)
Watch List: MSFT, PAYX, SUNW, CSCO and others

------------------------------------------------------------------
U.S. Market Numbers
------------------------------------------------------------------
MARKET WRAP  (view in courier font for table alignment)
------------------------------------------------------------------
        WE 10-7          WE 9-28          WE 9-21          WE 9-14
DOW     9119.77 +272.56  8847.21 +611.40  8235.81 -1369.7  -   .34
Nasdaq  1605.30 +106.50  1498.80 + 75.61  1423.19 -272.18  +  7.67
S&P-100  549.38 + 16.28   533.10 + 41.40   491.70 - 66.88  +  4.69
S&P-500 1071.38 + 30.44  1040.94 + 75.14   965.80 -126.74  +  6.76
W5000   9837.11 +274.18  9562.93 +662.48  8900.45 -1203.9  + 37.95
RUT      414.97 + 10.10   404.87 + 25.98   378.89 - 61.84  -  4.46
TRAN    2209.42 + 15.43  2193.99 +139.15  2054.84 -621.65  - 36.65
VIX       34.66 -   .53    35.19 - 13.08    48.27 + 13.67  +   .24
VXN       63.35 -  1.84    65.19 - 12.54    77.73 + 13.89  -  1.61
TRIN       1.14              .73              .60              .68
TICK       +290             +995              +21             +100
Put/Call    .96              .61             1.27             1.01
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===========
Market Wrap
===========

Financial weak, but broader market end positive
by Jeff Bailey

Many of the broader market indexes finished today's trading with 
gains, despite some weakness in the financials.  Banks got hit 
pretty hard today as the S&P Banks Index (BIX.X) fell 5.15%.  
This followed a suspicious decline of 3% that we picked up on 
yesterday from the 619.99 level during intra-day comment on 
OptionInvestor.com.  It was the "619.99" number that had us 
thinking there might have been some type of sell program coming 
into effect on the sector.  Today's further decline gives hint 
that maybe we were right.  This also had us looking at bond 
YIELDS a little closer and what the market might be thinking in 
regards to current low levels of interest rates being "the 
bottom."

For the week, the NYSE Composite (NYA.X) finished up 2% at 554.  
This is perhaps what many institutional investors consider "the 
market."  The Dow Industrials gained 3.08% on the week with a 
close back above the 9,000 level at 9,120.

We start getting more exposure to four-lettered stocks when we 
look at the S&P 500 Index.  This week, the S&P 500 gained 2.98% 
to close at 1,071.  The 1,082 looks to be the level of resistance 
that needs to be cleared on a closing basis to get things looking 
further bullishness.  We may have well seen a close above that 
level today had it not been for the underperformance of the 
financial, which make up about 14% of the S&P 500.  The narrower 
S&P 100 (OEX.X) finished up 3% for the week at 549.

When we just look at four-lettered stocks in the NASDAQ Composite 
(COMPX) we saw a nice gain this week of 7.14%.  There were some 
positive comments this week from Cisco Systems (NASDAQ:CSCO) and 
Dell Computer (NASDAQ:DELL), which helped bring in some short-
covering and the "good news" helped offset some bad news from 
others.  Some of the larger cap technology stocks as represented 
in the NASDAQ-100 (NDX.X) showed a weekly gain of 8.82% with a 
close above 1,271.

The smaller capitalized stocks in the Russell-2000 (RUT.X) didn't 
do quite as well as some would expect.  Here we saw a weekly gain 
of 2.72% and closing value of 415.

Dow Industrials Hypothetical Portfolio from Sept. 10 close





There were some interesting things we can pull from today's 
comparison in our hypothetical Dow Industrial Portfolio when we 
compare to last Thursday's market wrap.  Last Thursday, the 
portfolio (non-weighted) was showing a 10.27 LOSS and about 1/2 
that loss was erased in the past 6 sessions.  As we'll discuss 
below, the bulk of the gains looks to be from short covering and 
not necessarily from raging bull market action.  I'll discuss the 
reasons for this thought process below.

When we look at leadership we see that Wal-Mart (NYSE:WMT) 
"discount retailer" added to gains and now is up 13.34% since 
September 10th.  Last Thursday the stock was up 6.83% since Sept. 
10th.  This type of action is "leadership" as we see nice gains 
on top of nice gain.  However, not long ago we noted that AT&T 
(NYSE:T) had shown some impressive gains and we didn't expect 
that to continue week after week.  I'd expect WMT to show some 
type of consolidation or pullback next week.  If WMT can simply 
hold near the $50 level or above, this would be a good sign as 
this stock is a very good pulse on the markets perception of the 
consumer.  

From there we see that SBC Communications (NYSE:SBC) and AT&T 
(NYSE:T) look to be "stalling out" near-term.  AT&T did manage to 
add some gains (up from +5.94%), but SBC pulled back from a prior 
reading of +6.49%.

What I pull from this is that "leadership" in the Dow Industrials 
is very narrow right now.  In a very strong market environment we 
should be seeing continued leadership from those stocks that made 
the first strong move off the bottom.  Right now, Wal-Mart 
(NYSE:WMT) is the only stock that really added some gains.  Next 
week, equity bulls will want to see SBC start to show some type 
of comeback as a hint that early bulls are adding money to their 
favorites.  The amount of gain we see in our portfolio must be 
coming from somewhere, so lets see where that is coming from.

Once again I sorted the portfolio by % gain from Sept. 10th 
close.  The blue, red and pink numbers are where each of the 
stocks actually traded in the pecking order on Thursday, 
September 27th.  What I'm looking for is some significant moves 
up/down in the past week.

The one upward move that stands out most noticeably is Microsoft 
(NASDAQ:MSFT) "software."  Last Thursday, MSFT was showing a LOSS 
of 13.26% at $49.94 and today's close at $57.74 is an impressive 
move (+15.6% in six sessions).  What we want to do now is look 
for what "made" this stock do this (find the common denominator) 
and look for other stocks that have the same characteristics 
(maybe sector similarity, or chart technicals).  All we want to 
do is look to reproduce results, not try and come up with 
something new.

Microsoft Chart - What would have worked





It's very easy to go back and look for "what should have been 
done."  The trade set-up for MSFT would have been... Look for big 
volume on first test of a retracement level, then look for some 
type of re-test of that level on light volume (stock sold out).  
Once we have re-test, the next day we look to buy on break above 
prior day's high (09/27 high was $50.68 so buy at $50.69-$50.75) 
and follow with a stop just under the retracement low (if stock 
didn't break below that retracement level on BIG volume day, then 
stock should not violate that low if I'm trading bullish, if it 
does, then I'm wrong and will stop out).  Our bullish targets for 
this trade would be $57.59 or $61.39.  Anytime we hit a bullish 
target, we move our stop up to break-even.  

As you can see.... this type of systematic trading would have us 
at a profit.  Even if we used a break below the previous day's 
low as a short-term traders stop, we would have left with a 
profit this morning at $56.16 (open of trading was violation of 
yesterday's low of $56.21).

Relative Strength

The more odds we can stack in our favor the better.  What was the 
RS chart of MSFT looking like?  Is there something there we can 
use also?

Relative strength chart of MSFT vs. S&P 500





There's a lot of information on the relative strength chart and 
it plays out interesting.  MSFT outperformed the SPX like a champ 
from early January (lower left corner of chart).  In April (red 
4) stock give RS buy signal and its off to the races.  The rest 
is history when in early August (red 8) the stock gives RS sell 
signal and stock begins outperforming SPX, but this time to 
downside (get it out of my portfolio screams the fund manager).  

We've said before that relative strength does NOT necessarily 
tell us about price direction.  The "red 9" and "red A" are proof 
of that.  Even though relative strength was not really 
deteriorating for MSFT, the stock still fell roughly $7.  Why?  
Because the S&P 500 (market) was getting drilled also!  

Now think of this as it relates to your "trade set-up" from the 
bar chart, but instead of thinking like a bull, put yourself in a 
bearish trader's shoes.  Let's imagine that you shorted MSFT at 
$64 and have been holding.  On Thursday evening, September 27th 
you're looking for the big washout on a break below $47.64.  That 
type of "wash out" might also have your RS chart giving another 
sell signal!  However, that day you also have a "contingency 
plan" in place should things not unfold to the downside.  That 
contingency plan calls for "cover short on break above Thursday's 
high of $50.68."  Hey... that's the same set-up for the bullish 
trade!

That move from $50.69 was most likely brought on by extensive 
short-covering.  Look where we are now!  Stock is setting right 
on 50% retracement and RS could give a buy signal!  Something big 
is about to happen is my feeling.  Which way is it going to go?  
Stock's already up 15%, is it going to pull back, or are shorts 
going to get squeeeeeezed?  Sounds like a straddle/strangle trade 
to me.  Lots of uncertainty and major disagreement.  Especially 
at 50% retracement.

Strangle

Since MSFT is sitting right between strike prices of $60 and $55, 
lets set up a "strangle" (buy out of money call and out of money 
put.)  In early April, the stock unwound to $67 in just 7-days 
from the $57.50 level.  Hey!  In April... MSFT also have a RS buy 
signal and it might do that again!  If that doesn't happen and we 
get another round of selling, those that bought at $48-$50 might 
just let the stock go and lock in a nice profit.  That could have 
the stock falling back to the $50 level!  In essence, there's 
some room on either side, up or down and that's a good set-up for 
a strangle.

October strangle - Oct $60 calls (MSQJL) offered $1.20 and 
Oct $55 puts (MSQVK) offered $1.30.  (Cost for 1 contract each 
excluding commission assuming $57.75 open is $250).  

November strangle - Nov $60 calls (MSQKL) offered $2.70 and 
Nov $55 puts (MSQWK) offered $2.60. (Cost for 1 contract each 
excluding commission assuming $57.75 open is $530).

Personally, I like to buy as much time as I can afford.  This 
gives more time for the trade to work.  For instance, lets 
imagine that MSFT wants to trade higher to a target of $65, but 
it takes three weeks to get there considering market conditions.  
If I buy October expiration (October 19th) stock might only be at 
$61 as it fights with our 38.2% retracement level.  Hey, if she 
wants to run to $65 then OCT/NOV call will be winner, but I've 
got the time.  Then lets imagine that a BIG round of profit 
taking comes in and we get a bunch of "end of year tax selling" 
begin to happen in early November and stock pulls back to $53.79 
and 61.8% retracement.  I've still got those Nov $55 puts and can 
get some money back there.

Of course, just the opposite can happen, but try and plan ahead.

One more thing!

I've said before that MSFT is a "key stock" in the NASDAQ-100.  
Don't discount how much MSFT also moves the S&P 500.  Remember 
how we've been noticing the S&P 500 having some trouble at the 
1,082 level (61.8%) retracement?  I firmly believe there are some 
MAJOR buy/sell programs at current levels.  

We just don't know which direction a stock like MSFT could break.  
If we get a move above the 1,082 level and some major buy 
programs come in, what effect will that have on MSFT as index 
funds have to buy the stock to properly weight for the S&P 500 or 
NASDAQ-100?  If there are MAJOR sell programs right in here on 
the SPX at 1,082 and we get the pullback to 1,011 (80.9% 
retracement) MSFT will most likely participate in that downward 
move.

As it was in the WebEx Communications (NASDAQ:WEBX) 
straddle/strangle trade, we didn't have to know direction in 
order to profit.  We just had to have the right strategy at the 
right time.

OK... I missed the move to the upside in MSFT from $50.69, but 
that doesn't mean I can get positioned for the next round of 
volatility.  I think we're at a good level.

Also... don't forget to look at the new plays in the play list.  
I think there are some "honeys" there too.  Some of the short 
plays are stocks that look like they could see some profit taking 
and they're starting to look tired.

Have a great weekend!  I will be out of town on Monday, but you 
will be in the very capable hands of Eric Utley.

Jeff

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

Tax relief talk turns the markets around
by Russ Moore

At a mid-afternoon meeting in the rose garden, President Bush 
remarked that the economic stimulus package should consist solely 
of tax cuts rather than more spending, sparking a buying spree on 
Wall Street.

The DOW moved about 60 points in less than ten minutes on its way 
to a gain of +0.6 percent. The NASDAQ closed, up +0.5 percent and 
the NDX added +0.9 percent.

Volume was decent with 1.30 billion shares traded on the NYSE and 
1.80 billion moving on the NASDAQ. Despite the positive showing, 
market breadth was even on the big board, and negative on the 
NASDAQ, with losers outperforming winners by a 19/16 margin.

Weak sectors included the bank, airline, insurance, oil service, 
brokerage, internet and telecommunications.

The unemployment rate came in unchanged at 4.9 percent, however, 
non-farm payrolls declined by 199,000, the biggest drop since 
February 91’. In addition, Sun Microsystems, Gateway, and 
Advanced Micro Devices delivered more bad news on the earnings 
front. Sun, and Gateway, still managed to post gains.

Yesterday, I mentioned that investors would need to see a major 
downside surprise on the employment front in order to affect 
market direction. One might think that a drop of 199,000 non-farm 
payrolls would be enough to trigger a major sell-off, but 
remember, sentiment has undergone a shift to the bullish side 
and, the employment rate didn’t budge. Investors have been 
deluged with earnings warnings and are now at a point where the 
negative news goes in one ear and out the other. One piece of 
news that won’t go ignored is a growing unemployment figure, and 
that is almost certainly in the cards over the coming months. 




VIX 
Friday 10/05 close: 34.66


VXN
Friday 10/05 close: 63.43

30-yr Bonds
Friday 10/05 close:  5.31


Total Put/Call Ratio: .96


Equity Option Put/Call Ratio: .79


Index Option Put/Call Ratio: 2.34


===

NASDAQ 100 Index (NDX/QQQ)
52-Week High: 103.51
52-Week Low:   28.19
Current close: 31.77

Volume/Open Interest
Maximum calls: 30/88,580
Maximum puts : 27/58,429

Moving Averages
 10 DMA 29
 20 DMA 30
 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: 549.38

Volume/Open Interest
Maximum calls: 600/6,624
Maximum puts : 500/7,310

Moving Averages
 10 DMA  532
 20 DMA  536
 50 DMA  578
200 DMA  631

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: 1071.38

Volume / Open Interest
Maximum calls: 1050/21,660
Maximum puts : 1050/22,861

Moving Averages
 10 DMA 1038
 20 DMA 1048
 50 DMA 1139
200 DMA 1222

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:  9,119.77

Volume / Open Interest
Maximum Calls: 100/26,578
Maximum Puts   100/39,776

Moving Averages:
 10 DMA  8,845
 20 DMA  9,036
 50 DMA  9,816
200 DMA 10,389

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: 459.75

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

Moving Averages
 10 DMA 447
 20 DMA 462
 50 DMA 496
200 DMA 547

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: 406.10

Volume / Open Interest
Maximum Calls: 450/1,025
Maximum Puts:  390/2,118

Moving Averages
 10 DMA 382
 20 DMA 426
 50 DMA 523
200 DMA 594

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: 395.93

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

Moving Averages
 10 DMA 384
 20 DMA 381
 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 10/05
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 
9/18/01      406,387   471,823   (65,436)   (20.8%)
9/25/01      357,873   407,036   (49,163)   (24.9%)
10/02/01     365,200   408,567   (43,367)   (11.7%)

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
9/18/01        172,988   100,531    72,457      (5.6%)
9/25/01        122,613    71,721    50,892     (29.7%)
10/02/01       124,249    73,882    50,367      (1.1%)

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 
9/18/01       35,497    45,731   (10,234)   (8.0%)
9/25/01       26,761    36,812   (10,051)   (1.8%)
10/02/01      26,703    37,699   (10,996)    9.4%

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
9/18/01        22,876    21,702    1,174     (56.6%)
9/25/01        10,699     6,580    4,119     251.0%)
10/02/01       10,918     6,804    4,114      (0.1%)

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 
9/18/01       28,425    15,077   13,348      7.5%
9/25/01       20,013     7,806   12,207     (8.5%)
10/02/01      22,755    10,124   12,631      3.5%

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
9/18/01        7,335    15,044    (7,709)     46.1%
9/25/01        4,530    12,621    (8,091)      4.9%
10/02/01       4,731    11,868    (7,137)    (12.1%)

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        +50,367     +50,892        -43,367     -49,163

Total Open
Interest %       (+25.42%)  (+26.19%)     (-5.60%)   (-6.43%)
                 net-long   net-long      net-short  net-short


                     Small Specs             Commercials
DJIA futures     (Current) (Previous)    (Current) (Previous)
Open Interest
Net Value          -7137      -8091          +12631     +12207
Total Open
interest %       (-43.00%)    (-64.11%)      (+38.42%)  (+43.88%)
                 net-short   net-short     net-long    net-long


                     Small Spec              Commercials
NASDAQ 100      (Current) (Previous)    (Current) (Previous)
Open Interest
Net Value         +4114      +4119         -10,996    -10,051

Total Open
Interest %        (+23.21%)   (+23.84%)     (-17.07%) (-15.81%)
                 net-long   net-long      net-short net-short


What COT Data Tells Us
----------------------
Indices:.No significant changes this week although we did see the 
Commercial players continue to reduce their net-short contracts 
on the S&P 500. We will wait until the Commercials have moved 
into net-long positions before we raise the bullish flag.. .

Gold:.Another wild reversal took place this week as the 
Commercials are once again net-short. We have seen gold level off 
over the last week and it will be interesting to see if this 
bearish stance by the Commercials, pays off.

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
10/02 67,122 contracts net-short

Data compiled as of Tuesday 10/02 by the CFTC.


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

Tenet Healthcare - THC - close: 61.00 change: +0.78 stop: 57.00

Original Comments When Selected On October 4th:

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. 

Updated Comments:
Well it's about time!  S&P upgraded THC's debt rating from junk
status to investment-grade.  Not many companies will be reporting
a 45% jump in their latest quarter operating profits which THC 
just did on the 3rd of October.  To quote from a Reuters news 
article, "S&P said Tenet, whose 114 hospitals make it the 
No. 2 U.S. acute care hospital owner and operator, should be able 
to sustain recent operating improvements, improve its cash flow, 
and significantly cut debt. Its rating outlook is stable."  Sounds 
good to us.  The move on Friday just confirmed our outlook that 
the stock was poised to start a new bullish run.  Plus, we believe
there is the possibility of a split announcement.  THC's last 
split was a 2:1 back in 1991 when the stock was trading above $50.  
As you can see the stock is now above $60.  Management is 
authorized to issue up to 700 million shares and there are only 
329 million currently outstanding.  That's enough for another 2:1 
split.  What makes this announcement a possibility is the THC 
annual shareholder meeting that is expected on Wednesday morning, 
October 10th, 2001.  Yup, that's just a few days from now.  We 
would not make any bets that there will be an announcement and 
would prefer to trade on the stock's current technical and 
fundamental outlook.

Picked on October 4th @ $ 60.22
Gain since picked:       + 0.78
Earnings Date:            10/03 (confirmed)





==========
Watch List
==========

Microsoft - MSFT - close: 57.74 change: +1.30

WHAT TO WATCH:  It's hard to have a rebound in the software
sector without Microsoft.  The stock has recovered nicely from
its sub-$50 days in late September.  What drew our attention
tonight was the nice intraday bounce at $55.00.  Traders should
be watching for a follow through up to $60 (it's 50-dma) or a
failed rally and then back to $55 or below.  FYI, its 200-dma
is 61.30 and earnings are October 18th.




---

Paychex Inc. - PAYX - close: 31.91 change: +0.16

WHAT TO WATCH:  Earnings were on Sept. 20th and the results were
positive but PAYX cut guidance going forward.  Not to worry,
we're sure that's going to be a popular practice this month.
The last three weeks appear to have built a nice bottom for
shares of PAYX with the last few days showing higher lows.
If you're looking for a short-term trade we'd watch for the
stock to close over current resistance at $32.  Once triggered
we might capture the move up to $35 or $36.




---

Sun Microsystems - SUNW - close: 9.85 change: +0.56

WHAT TO WATCH:  Announce bad news and get rewarded with a 6% gain.
Interesting market we live in, of course it always has been.
Actually, SUNW says they are trying to cut cost to put them
on the road to profitability.  Some analysts believe this may
not be the last of the layoffs but we'll have to wait and see.
In the mean time the stock has built a nice base at $8.00.
The dip today put a low at 8.70 and it's just under resistance
at $10.  If the stock can breakout above $10 traders might be
able to capture the 20% move up to $12.  Earnings are also
on October 18th.




---

Cisco Systems - CSCO - close: 14.94 change: +0.52

WHAT TO WATCH:  No stranger to our watch list, CSCO is one of
the first stocks that come to everyone's mind when you think
tech stock rebound.  This week has proven just how fast that
can occur.  The stock is already up 30% from Wednesday's close.
That's right.  Most of us missed a 30% move in CSCO, of course
a few of us still own it when we said it wouldn't trade below
$50.  We have to live and learn and that means adapt.  Anything
up 30% in three days is begging for profit taking but the stock
has been so oversold for so long it could go another 30% before
stopping to look around.  When the market's went south this
morning, CSCO traded down to 13.74 before making a strong
rally towards the close.  Our trigger, should we choose to 
accept it, is to wait for CSCO to get above $15.00.  Once
there, our mission is to ride the stock up to $16, $17 or $18
(take your pick, any would be a nice short-term gain).  $16 and 
$18 are the most defined levels of overhead resistance but again 
- the stock could easily make it to $18 before it remembers it 
needs to retrace these gains.  It could also go back to $12 so 
don't play without a stop.  Earnings are November 5th, 2001.






--- MORE STOCKS TO WATCH ---

AAPL - nice base at $15, finally closed above $16 again. Possible
long play here.

LNCR - high volume breakdown through support at $24.  Looks bad.
First line of defense is $22 but beyond that we're looking at $20.

VRTS - another fast moving software company which means your stop
may have to be more than 10%.  Hovering at $25, this stock could
go either way.  Upside target would be 27.50 then $30.  Downside
target is back to $20 or worse.  Earnings are October 16th.

PSFT - yet another software company that moves fast and furious.
Again, it's hovering near $25.  Bulls should be positive about its 
close over $25 from the low of 23.59.  Topside target would be $30,
downside target back to $20 or worse.

BBY - closed right under resistance at $50.  Seven days ago the 
stock traded to an intraday low near $40 so it has seen a nice
rebound.  Overhead is its 200-dma at 50.77.  If the media starts
talking up the retail sales report on Friday, BBY might get
some buying interest.  First upside target would be $55.  If
analysts start talking down the retail sales report (very possible)
then BBY could be looking at $45 or $42.50 again.  

LTD - another retail stock that made a nice bounce at support
on Friday at $10.  Overhead resistance at $11.  Initial target
would be $12 on the upside with potential for $13.  Read the
BBY update above for comments on the upcoming retail sales report.


--- STILL WATCHING ---

A few stocks from our Wednesday, October 3rd Watch List 
still look like potential trades in development.

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

Homestake Mining Co. - HM - close: 9.11 change: +0.12

UPDATE:  Gold and gold stocks continue to be in the news.  HM
appears to be holding on to support near $9.00.  This might be
an entry point for those looking to play the gold bug.  Short-
term target would probably be 9.50 to 9.75 with it eventually
hitting $10.  A better entry would be 8.75 and the best would
be at the 50-dma or 8.50 but a dip this low would concern us.
Play with a tight stop.

-- original write up, Wednesday --

WHAT TO WATCH:  HM is one of the largest North American-based gold
mining companies.  Every year they produce over 2 million ounces
of gold.  Due to the market's bearish trend these last several
months and the attacks on Sept. 11th, gold has been in the news
and on the minds of investors looking for a hedge or some form of
safety.  Whether buying shares in a gold stock is a true hedge or
not is up for discussion and our own Jeff Bailey actually shared
a few comments about the issue but it is beyond the scope of this
watch list.  We would rather highlight HM's long-term up trend that
appeared to begin back in late February.  It has certainly been
a rocky road as shares took a big dip near the 1st of April but
overall shareholders have been very rewarded with a climb from the
$5 level to over $9.  I've chosen to highlight it on the watch list
because the trend has been rather strong and allowed patient 
investors opportunities to enter at the bottom of its trading channel
which has been close to its 50-dma.  Hopefully you will notice
that the share price is no where close to the 50-dma (@ 8.43).
This means that interested traders should keep this on their own
watch list to see if the trend continues or if another trade 
develops.  Levels traders should be watching are a breakout above
overhead resistance at $9.50, a potential bounce at what could be
price support at $9.00, or the above outlined scenario - a dip
back to the 50-dma that will probably have moved up to the 8.50 
area by the time they connect (if they connect soon).  Don't forget
to plan your traders around the October 29th earnings announcement
which we have been unable to confirm. 




---

Guidant Corp. - GDT - close: 38.62 change: -0.26

UPDATE:  If you've been reading the newsletter then you know
that many industry experts and analysts feel that medical
device makers should be protected from a down turn in the
economy.  Shares of GDT have been on a nice rebound and 
the dip to support at $38 might be an entry point to go 
long.  Please read the write up below but use a tight stop.

-- original write up, Wednesday --

WHAT TO WATCH:  Medical device maker, Guidant saw a lot of bad
press in mid-July when an FDA advisory panel voted 6-2 against
their Contak CD heart monitor device.  To pour salt in the wound,
the panel voted unanimously to approve rival Medtronic's heart
device instead.  GDT's stock was hammered over the next two
days before finding a bottom under $27.  Since then the stock 
has regrouped, built a base at $30 and begun a new ascent back
to pre-July levels.  The stock ran up to $39 in late August on
a strong rally only to give most of it back before finding
support at its 50-dma in early September.  Since then the stock 
has been very strong and resistant to the violent swings in the 
broader indices.  Analysts believe that the medical device
market should be recession-proof and thus less risky as we proceed
into the 4Q.  Right now shares of GDT are butting up against 
overhead resistance at $40.  We feel that both bullish and bearish
traders should be watching GDT for the next move.  Bullish 
investors should be watching for a close over $40.  However, to
be safe, we would wait for the stock to close over $41 or its
200-dma.  Bearish traders will be looking for just the opposite.
Even though the stock looks strong it has seen two weeks of 
steady gains.  The MACD is still positive but the next day or
two could show a bearish divergence in the MACD histogram.  Shorts
could also wait for the more obvious rollover in share price or
a failed rally at $41 or $40.  Be aware that GDT is due to 
announce earnings on October 18th.




---

Ball Corp - BLL - close: 58.49 change: -0.36

UPDATE:  Wednesday we discussed a potential entry point at 57.50.
The market dip on Friday helped bring BLL down to 57.25, just 
below its 10-dma, before it bounced midday and closed back over
$58.  The bounce has us on the lookout for a gain on Monday but
we need to confirm market direction first.

-- original write up, Wednesday --

WHAT TO WATCH:  No stranger to the watch list, we're highlighting
Ball again.  BLL has been a big winner for the 3Q and doesn't
show any signs of slowing down.  Briefly, BLL makes most of its
money with its packaging business (tin cans) but is also know 
for its Ball Aerospace division.  This appears to be a winning
recipe as the stock has appreciated over 20% in the last couple
of months.  For the more conservative group this stock may appear
rather overextended.  If you fall into this category then you 
would do best to look for a pullback to the $57.50 range or
even a dip back to $55.  However, it's possible the stock may
not return to $55 in the near future.  The more aggressive bunch
can also look for the dip to 57.50 but the second close over 
the $60 mark is very encouraging for the bulls.  Depending on
your risk tolerance a play could be argued here as long as one
uses a stop.  BLL is expected to announce earnings on Oct. 25th.




---

TXU Corp - TXU - close: 49.77 change: +0.06

UPDATE:  TXU is another stock that has been relatively 
strong lately.  Shares saw an early dip today down to the
$49 level before trading right back to resistance under
$50.  The trigger is a close over $50 for the bulls or 
a breakdown for the bears.  Take your pick for support,
one could argue $49, $47 or $46 as price support for the
stock.  

-- original write up, Wednesday --

WHAT TO WATCH:  TXU is a Dallas, Texas-based electricity company
that services customers in the U.S., Europe and Australia.  The
stock has seen an incredible rebound from its low just five days
ago.  Selling pressure took the stock down to bounce intraday 
at 43.25 on Sept. 27th before closing at 44.41.  At the time, the
200-dma was 43.73.  Since then the stock has been a non-stop
rocket straight up to five month resistance at $50.  This will
make the third attempt for buyers to push beyond this level.
A triple top breakout or breakdown can be a powerful technical
signal for traders.  Both bullish and bearish investors should
be watching to see which influence will win out for this stock
in the short-term.  TXU is expected to announce earnings near
the 25th of October.  Exact date is unconfirmed.




---

Boston Scientific - BSX - close: 21.35 change: +0.36

UPDATE:  Highlighted on Wednesday at 21.35, the stock has now
made two more days of gains.  This is another of the medical
device makers that is seeing buying interest.  By the looks of
the intraday chart this stock would have kept climbing had the
closing bell not wrung.  Does it look good now?  Yes, but it 
would look a bit better with another pull back to 21.50 or
even 21.00.  Trade it according to your ability and risk 
tolerance.  Don't forget that earnings are expected on October
22nd.

-- original write up, Wednesday --

NOTE: BSX produced a nice technical breakout today over resistance
at $21.  The stock is not a big mover and has been in a steady
climb since mid-July.  We did see lower prices and volatile moves
from Sept. 7th-20th but shares quickly resumed their previous
trend.  Like our GDT entry above, some analyst believe that the
medical device industry should be recession proof.  This could
be an entry point for bullish traders.  Look for confirmation
and play with a stop.





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Do not duplicate or redistribute in any form.

PremierInvestor.net Newsletter          Weekend Edition 10-05-2001
                                                    section 2 of 3
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 two:

Split Trader
  New Plays: none 
  Play Updates: CHV, JEC, THC
  Closed Plays: none

Net Bulls
  New Plays: QUALCOMM - QCOM (Bearish)
  Long Term Play: Homestore.com - HOMS (Bullish)  
  Bullish Play Updates: Engineered Support Sys. - EASI
  Bearish Play Updates: none active at this time
  Closed Bullish Plays: none 
  Closed Bearish Plays: none

Stock Bottom / Active Trader
  New Plays: SYSCO Corporation - SYY (Bearish)
  Bullish Play Updates: BMET, LMT, MO,
  Bearish Play Updates: none active at this time
  Closed Bullish Plays: none
  Closed Bearish Play: none


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

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

  -----------------------
  SPLIT CANDIDATE Updates
  -----------------------

Chevron Corp. - CHV - close: 88.44 change: +1.33 stop: 84.75 

To be honest we feel like we said everything yesterday in 
Thursday's update for Chevron.  Oil futures dipped a little
today after Thursday's gain but remain above the critical $22
a barrel.  The Oil Services Index (OSX) closed with a fractional
loss but the Oil Index (OIX), of which CHV is the biggest 
component, gained another 1% today.  CHV gained 1.5% after trading
above Thursday's hurdle of $88.  To quickly recap Thursday's
comments, analyst and industry watchers feel that OPEC could
be close to cutting production to keep the price of oil between
its $22 to $28 price band.  One of OPEC's ministers was quoted
as saying they would do anything necessary to stabilize the 
world's oil supply.  We are encouraged by today's trading but
still expect both $89 and the $90 level to be obstacles to CHV's
progress.  The 200-dma and the 50-dma converge near $89 and
$90 is significant price resistance.  Considering that the
OIX index has regained or retraced 61.8% of its mid-September
slide from 320 to 270 in such rapid fashion there are a lot
of investors and traders that are looking at nice gains.  
Stocks move in cycles and this group needs to see some profit 
taking to provide an entry point for the next leg up.  On a
more positive note, the OIX has managed to trade above resistance
at 295 (the 50% retracement level) and 300 (price resistance).
We were tempted to move the stop to just under Friday's low at
86.50 but felt that may be too close.  Don't let our decision
sway you from placing your stop where you feel the most comfortable.
We are going to leave ours at 84.75 in hopes that it will allow
enough room for CHV to regroup for its ascent past the $90 level.
Remember, some analyst have longer-term price objectives of
over $100 for CHV.  First it will have to tackle heavy resistance
at $93 and $98.

Picked on September 27th @ $ 84.75
Gain since picked:          + 3.69
Earnings Date:               10/25 (not confirmed)




---

Jacobs Eng. - JEC - close: 65.17 change: -0.98 stop: 64.25 

JEC is trading to our expectations.  The stock continued to do
some profit taking on Friday with a pull back to $65.  Actually,
we saw a dip to 64.64 but shares closed over $65.  Thursday
we had discussed that new positions could be considered on a
pullback to the $65 area.  With a stop at 64.25 we have severely
limited our potential downside so this would propose a nice
risk/reward scenario for new trades.  With the late day bounce
in the Dow, traders should be confirming stock and market 
direction on Monday before initiating any new trades.  At this
point JEC looks poised for a bounce and our short-term target
would be $70.  Earnings are early November.  

Picked on September 25th @ $ 61.21
Gain since picked:          + 3.96
Earnings Date:               11/01 (not confirmed)




---

Tenet Healthcare - THC - close: 61.00 change: +0.78 stop: 57.00

Well it's about time!  S&P upgraded THC's debt rating from junk
status to investment-grade.  Not many companies will be reporting
a 45% jump in their latest quarter operating profits which THC 
just did on the 3rd of October.  To quote from a Reuters news 
article, "S&P said Tenet, whose 114 hospitals make it the 
No. 2 U.S. acute care hospital owner and operator, should be able 
to sustain recent operating improvements, improve its cash flow, 
and significantly cut debt. Its rating outlook is stable."  Sounds 
good to us.  The move on Friday just confirmed our outlook that 
the stock was poised to start a new bullish run.  Plus, we believe
there is the possibility of a split announcement.  THC's last split
was a 2:1 back in 1991 when the stock was trading above $50.  As
you can see the stock is now above $60.  Management is authorized
to issue up to 700 million shares and there are only 329 million
currently outstanding.  That's enough for another 2:1 split. 
What makes this announcement a possibility is the THC annual
shareholder meeting that is expected on Wednesday morning, October
10th, 2001.  Yup, that's just a few days from now.  We would not
make any bets that there will be an announcement and would prefer
to trade on the stock's current technical and fundamental outlook.

Picked on October 4th @ $ 60.22
Gain since picked:       + 0.78
Earnings Date:            10/03 (confirmed)





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

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

  ----------------
  New Bearish Play
  ----------------

QUALCOMM - QCOM - close: 38.46 change: -3.54 stop: 42.00

Company Description:
Qualcomm created the code-division multiple access (CDMA) standard 
for wireless networks.  CDMA-based networks account for 12-percent 
of the worlds' mobile subscribers.  Qualcomm collects royalties for 
CDMA use and makes CDMA-based products such as chipsets and 
software.   Although, the US is a Qualcomm stronghold, it is 
working hard to expand in Asia, in particular China, off of its 
dominance in South Korea.  This effort got a big boost when China 
Unicom, China's second largest wireless operator, awarded $1.46 
billion in contracts for equipment to build a cdma-based network. 
The Chinese adoption of cdma is seen as crucial for Qualcomm, 
because as it is also critical for the adoption of cdma throughout 
Asia.  Unfortunately, on the heels of the good news was an 
announcement that Verizon Wireless was switching from cdma to a 
rival technology based on wCDMA.  

Fundamentals:
Analysts project the company, which earned $1.05 in the fiscal 
year ended September 2000, will earn $1.04 in 2001 and $1.27 in 
2002.  This gives the company a forward P/E of 37.  

Why We Like It:  
Rueters reported that two analysts cut earnings estimates and we 
find their logic both reasonable and compelling.  U.S. Bancorp 
Piper Jaffrey analyst Sam May sliced his fiscal 2002 earnings per 
share estimate to $1.19 from $1.23 for the fiscal year ending in 
October 2002.  He cited concerns about delayed rollouts of 
Qualcom's CDMA-based networks in the US and Japan and drops in 
interest rates.  He said about 23-percent of the company's earnings 
for the quarter ending in June came from investing their hefty $2.1 
billion bank account in CD's, debt and treasuries.   May maintained 
his long-term "buy" rating but feels the shares will be under 
short-term pressure.   SG Cowen chimed in cutting its fiscal 20001 
earnings forecast from $1.05 to $1.04 and from $1.24 to $1.20 for 
2002.  

On Friday, the shares blasted through important support at $42 to 
freefall down to $38.46 by the close.  This support was critical as 
the next levels are a long way off in the $22 to $30 range last 
seen in May of 1999.  If these levels do not hold, then a visit to 
the $10 to $15 range from April 1999 is the next identifiable area 
of support.  Although we find it hard to believe the shares are 
going to drop this far, it is clear the bears are in firm control 
of the helm.  Our point and figure analysis produced a bearish 
price target of $29.  We will start this volatile bearish play with 
loose stop at $42.

Picked on October 5th at $38.46
Earnings Date:              11/06  (not confirmed)





=================
NB Long Term Play
=================

Homestore.com - HOMS - October 5th close:$5.65 change:-0.03

Company Description:
In February 2001 8.4 million people visited the Homestore.com 
family of real estate web sites.  These sites include 
Realtor.com where over 1.4 million homes are listed for sale, 
Homebuilder.com that offers 120,000 new homes and lots, 
Commercial.com for commercial real estate and Rent.net which 
displays 45,000 homes for the rental market.  In all these sites 
have a 90-percent market share for Internet home listings.  Last 
January the company secured its position by acquiring rivals 
Homebid.com and Move.com.  Homestore is also able to protect its 
dominance through strategic alliances with the National 
Association of Realtors  (NAR), the National Association of Home 
Builders (NAHB), the largest Multiple Listing Services (MLSs), 
the NAHB Remodelers Council, the National Association of the 
Remodeling Industry (NARI), the American Institute of Architects 
(AIA), the Manufactured Housing Institute (MHI), real estate 
franchises, brokers, builders, agents and AOL-Time Warner.  Agents 
post pictures and descriptions of properties and virtual tours of 
homes on Realtor.com.  Approximately 61-percent of sales are from 
subscription fees from real estate professionals and the other 39-
percent from Web advertisers. 

Fundamentals: 
Last year, the company lost 97-cents per share on sales of $230 
million.  The analysts' consensus estimate for the current fiscal 
year is for earnings of 47-cents per share on revenue of $500 
million and 84-cents on $653 million in 2002.  

Last Wednesday, the company warned that it expects to post a pro 
forma loss in the third quarter due to continued deterioration in 
the advertising market and the cancellation of sales calls 
following the attacks on the World Trade Center and Pentagon.  
The company forecasts a third quarter pro forma loss excluding 
nonrecurring items of 1 to 6-cents per share on revenue of $114 
to $118 million.  In response Morgan Stanley lowered 2001 profit
estimates from 55-cents per share to 12-cents and from 95-cents 
to 16-cents for 2002. 

Why We Like It:
The softening real estate market, capped off by Homestore's warnings 
has put this firm's shares in an ugly decline into Friday's $5.65 
close.  Still one very important fact should make the stock 
attractive to the very patient investor - as Microsoft's Windows 
operating system has a monopoly over the personal computer - so 
does Homestore.com have a virtual monopoly over the real estate 
market on the Internet.  And although they may be hammered by the 
ugly economy, neither real estate nor the Internet, nor 
Homestore.com will be going away.  This means whenever the long-
awaited recovery makes its appearance, investors who stashed some 
sub-$6.00 Homestore stock away will be feeling pretty good about 
their investment.  

Despite the recent warning, Homestore and analysts expects 2001 
to be their first profitable year.  Even if the recession 
continues into 2002, Homestore strong balance sheet means they 
have the ability to survive.  As of the quarter ending in June 
the company had $175 million in cash and no short or long-term debt.

Less than a month ago a new management team took over, they are 
reorganizing the company with an emphasis on "balance sheet 
reconciliation, eliminating overlapping functions, facilities and 
personnel and creating cohesion in a snake's nest of unintegrated 
business acquisitions" according to CEO B.J. Rone.

In economic downturns, companies with dominant market positions 
become more dominate as weaker rivals fold.  Homestore's leading
position in real estate over the Internet suggests they will not 
remain a sub-$6.00 stock when the recovery is in place.  

Earnings Date               N/A (Not Confirmed)





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


Engineered Support Sys. - EASI - close: 54.21 chg: +0.71 stop: 48.25

EASI was a new long play initiated on Thursday and we're off to
a good start so far.  As one of the leading manufacturers of 
military support and electronic equipment for the U.S. armed
forces, odds are very good that EASI will grab a nice slice from
the $345 billion defense bill that the Senate approved last Monday.
The stock is showing a lot of strength with today's gain but we
expected it to stall at the $55 mark.  We need to see shares 
pull back with a little profit taking while new positions can
be taken on the bounce.  We'd like to see the stock come back
to $51 or $52 based on the high from Sept. 24th.  Yet we would
not be surprised to see the stock actually dip to $50 before
trading higher.  Any of these levels could prove to be profitable
entry points to go long.

Picked on October 4th @ $53.50
Gain since picked:      + 0.71
Earnings Date:             N/A 





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

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

  --------------
  New Bearish Plays
  --------------

SYSCO Corporation - SYY - close:$26.12 change:-0.27 Stop:$27.75

Company Description:
This Houston, Texas-based firm is the largest food distributor in 
North America.  SYSCO provides frozen foods, canned and dry goods, 
fresh meat and produce, medical supplies, and cleaning supplies 
(approximately 275,000 different products) to roughly 365,000 
customers including restaurants (two-thirds of sales), schools, 
health care facilities and schools.  The company has 115 
distribution centers in the US and Canada.

Fundamentals: 
In the fiscal year ended June 2001, the firm earned 90-cents per
share on sales of $21.8 billion.  The analysts' consensus forecast 
for this year is for earnings of $1.10 per share on sales of $24 
billion and $1.13 per share in 2003.  The company has a current P/E 
of 29 and forward 2002 one of 26.  The industry average P/E is 18.

Why We Like It:
Since the terrorist attacks on September 11th, there has been no 
waiting in American restaurants.  Some estimates predict that 
business has been off from 15 to 25-percent.  This makes SYY shares 
rise from $21.75 on September 21st to the $26.80 close on October 
3rd a bull run without legs.  The catalyst was optimistic bargain-
hunters betting that the sharp drop from $27.79 in the wake of the 
disasters was a temporary event.  Unfortunately for the restaurant 
business, the problems existed before the attacks.  A slew of 
warnings from companies such as Applebee's (APPB), California 
Kitchen (CPKI) Cheesecake Factory (CAKE) and even the low-cost 
burger chain Jack in the Box (JBX) indicates a longer standing drop 
in sales for the industry.  And if restaurants are serving fewer 
customers, it stands to reason that they are not ordering as much 
food from distributors like SYSCO.  Profitable longs who bought 
below $24 must be getting nervous now that the shares have stalled 
short of resistance at the $27.38 200-day moving average.  Two 
consecutive days with small losses must have them thinking that 
it's time to consider taking profits.  A weak sector, nervous longs 
and nearby upside resistance add up to an attractive bearish play. 
We see a move to the $22- $23 range with an outside shot at $19 to
$20.  We will take advantage of the 200-dma and place a $27.75 
stop just above it.

Picked on October 02nd at $29.31
Earnings Date              10/18 (Not Confirmed)





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

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

Biomet Inc - BMET - close: 30.91 change: +0.14 stop: 28.00

Thursday we discussed potential entry points to go long if
BMET dipped back to $30.  Friday, we got that chance as BMET
traded towards $30 early morning before climbing again.  The
good news was the S&P Healthcare index (HCX) which provided
a decent bounce after two days of profit taking.  We still
need to see the HCX over its 200-dma at 824.  Above this level
the group has more resistance at 834.  Now that BMET has 
reaffirmed the $30 support level we'd like to see it close
above $31. Confirm stock, sector and market direction before 
initiating any new plays.

Picked on October 2nd at $30.35
Gain since picked:        +0.56
Earnings Date             09/20 (confirmed)




---

Lockheed Martin - LMT - close: 47.73 change: +2.13 stop: 44.25 *new*

Like high-octane jet fuel, word that the Pentagon is close to
a decision on the Joint Strike Fighter project has shares of
LMT soaring.  Today's gain of 4.67% is certainly a move in the
right direction putting the stock above resistance at $46.
Hopefully, the maxim that previous resistance becomes support
will remain true for LMT.  By the looks of Friday's close the
stock could keep climbing come Monday morning but eventually
we'll see some profit taking.  Bullish traders will be looking
for that dip to jump on board.  Pentagon said they are on track
to make the decision on who will be awarded the $500 Billion
Joint Strike Fighter contracts by October 26th, 2001.  Currently,
Boeing (BA) and Lockheed Martin (LMT) are both bidding on the
project.  This is probably consider the Holy Grail for these
builders as the project is worth more than five times the
combined market cap of BOTH companies.  Investors should be 
aware that the loser will likely gap down the next day even
though both companies will be beneficiaries of America's new
war terrorism.  We would look for a pull back before starting
any new long positions.  In the mean time we're going to raise
our stop.  Currently, the newsletter is up over 10% on this
play and we want to protect some of these gains.  Feel free to
raise or lower your own stop to where you feel the most comfortable.
We're raising ours to 44.25.  The last few sessions have seen
intraday lows of 44.50 and we don't want to be stopped out
prematurely.

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




---

Phillip Morris - MO - close: 50.16 change: +0.31 stop: 47.75 

Hey, did you hear that Phillip Morris is replacing Global
Crossing (GX) in the S&P 100 index?  No?  It appears neither
did anyone else.  This stock is just creeping along and it's
driving the trader in us nuts.  Don't get us wrong, we don't
mind stocks with a slow and steady climb but MO has been 
focused on the slow since we picked it.  If you get impatient
keep repeating our mantra...MO is a defensive stock for any
recession and their yield makes them an attractive investment
in a low interest rate environment.  We've been eagerly 
anticipating MO to breakout above resistance at $49 and $50
and now that it has we'd like to see at least a little more
momentum.  Looking ahead we see resistance at $52 and $54.
Fortunately, the company is expected to announce earnings in
a week and a half.  Maybe we'll get some excitement then.
New positions could be considered now that MO is over $50
but we would probably look for a tighter stop at just under
49.00.  This would be tighter than ours at 47.75.

Picked on August 30th at $47.94
Gain since picked:        +2.22
Earnings Date             10/17 (unconfirmed)





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

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

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

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Do not duplicate or redistribute in any form.


PremierInvestor.net Newsletter         Weekend Edition 10-05-2001
                                                   Section 3 of 3
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/100501_3.asp
=================================================================

In section three:

Market Watch for Week of October 08th:
   - Major Earnings
   - Stock Splits
   - Economic Reports

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

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

==================================================
Market Watch for the week of October 08th
==================================================

  ------------------------
  Major Earnings This Week
  ------------------------

Symbol  Company               Date           Comment      EPS Est   

AMB     AMB Property          Mon, Oct 08  After the Bell    0.63
BRE     BRE Properties        Mon, Oct 08  After the Bell    0.70
FDC     First Data            Mon, Oct 08  After the Bell    0.66
SGR     The Shaw Group        Mon, Oct 08  ------N/A-----    0.44

APOL    Apollo Group          Tue, Oct 09  Before the Bell   0.25
FVB     First Virg. Banks     Tue, Oct 09  ------N/A-----    0.78
HDI     Harley-Davidson       Tue, Oct 09  Before the Bell   0.25
INFY    Infosys Tech Limited  Tue, Oct 09  After the Bell    0.31
ISCA    International Spdwy   Tue, Oct 09  Before the Bell   0.39
LRCX    Lam Research          Tue, Oct 09  After the Bell    0.16
MOT     Motorola              Tue, Oct 09  ------N/A-----   -0.07
PBG     Pepsi Bottling Group  Tue, Oct 09  Before the Bell   0.95
BPOP    Popular, Inc.         Tue, Oct 09  After the Bell    0.58
RATL    Rational Software     Tue, Oct 09  After the Bell    0.06
TRMK    Trustmark Corp        Tue, Oct 09  ------N/A-----    0.42

ABT     Abbott Laboratories   Wed, Oct 10  ------N/A-----    0.44
ACF     AmeriCredit           Wed, Oct 10  After the Bell    0.88
ARA     Aracruz Celulose S.A. Wed, Oct 10  ------N/A-----    0.05
AVX     AVX Corporation       Wed, Oct 10  After the Bell    0.02
BRO     Brown & Brown         Wed, Oct 10  After the Bell    0.38
ET      E*Trade               Wed, Oct 10  After the Bell    0.00
SSP     E.W. Scripps          Wed, Oct 10  ------N/A-----    0.33
FAST    Fastenal              Wed, Oct 10  ------N/A-----    0.47
DNA     Genentech             Wed, Oct 10  After the Bell    0.19
DA      Groupe Danone         Wed, Oct 10  ------N/A-----     N/A
IYCOY   Ito-Yokado            Wed, Oct 10  After the Bell     N/A
MTB     M&T Bank              Wed, Oct 10  Before the Bell   0.98
MI      Marshall & Ilsley     Wed, Oct 10  Before the Bell   0.93
MTG     MGIC Investment Corp. Wed, Oct 10  Before the Bell   1.46
STI     SunTrust              Wed, Oct 10  Before the Bell   1.20
WLL     Willamette Industries Wed, Oct 10  ------N/A-----    0.52
WIN     Winn-Dixie Stores     Wed, Oct 10  After the Bell    0.16
YHOO    Yahoo!                Wed, Oct 10  After the Bell    0.01

ACN     Accenture Ltd         Thu, Oct 11  Before the Bell   0.11
BBT     BB&T                  Thu, Oct 11  Before the Bell   0.62
CMH     Clayton Homes         Thu, Oct 11  ------N/A-----    0.19
COST    Costco Cos            Thu, Oct 11  Before the Bell   0.40
CREE    Cree                  Thu, Oct 11  After the Bell    0.10
CUM     Cummins Inc.          Thu, Oct 11  Before the Bell   0.07
DJ      Dow Jones             Thu, Oct 11  Before the Bell   0.18
HCBK    Hudson City Bancorp   Thu, Oct 11  ------N/A-----    0.32
IFIN    Investors Fncl. Srv.  Thu, Oct 11  ------N/A-----    0.39
NCF     Nat. Comm Fncl Corp   Thu, Oct 11  Before the Bell   0.29
NETA    Network Associates    Thu, Oct 11  After the Bell    0.00
NVS     Novartis AG           Thu, Oct 11  ------N/A-----     N/A

NRG     NRG Energy            Fri, Oct 12  Before the Bell   0.07


  -------------------------------
  Upcoming Stock Splits This Week
  -------------------------------

Symbol  Company Name         Ratio   Payable    Executable

PDLI    Protein Design Labs   2:1     10/09      10/10
EQR     Equity Residential    2:1     10/11      10/12


  --------------------------
  Economic Reports This Week
  --------------------------

Most U.S. Economic reports will probably take a backseat 
to the beginning of corporate America's 3Q earnings season.
While this is sure to be a dismal earnings season most analysts
will probably be listening for the conference call if numbers
are even mildly close to where they should be.  Above it all,
both the economic reports and the earnings reports will be
overshadowed by any military actions taken by the U.S. and
our new coalition on terrorism.  The reports to watch are 
all on Friday with the PPI, the Retail sales and the Sentiment
report.

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

Monday, 10/08/01
-- None -- 

Tuesday, 10/09/01

BTM Schroders         10/4  Forecast:    N/A  Previous:   0.2%
LJR Redbook           10/4  Forecast:    N/A  Previous:   2.3%
API Oil Stocks        10/5  Forecast:    N/A  Previous:  3.42M

Wednesday, 10/10/01

Wholesale Inventories  Aug  Forecast:  -0.2%  Previous:  -0.7%


Thursday, 10/11/01

Jobless Claims        10/5  Forecast:   N/A   Previous:   528K
Export Prices ex. ag.  Sep  Forecast:   N/A   Previous:  -0.3%
Import Prices ex. oil  Sep  Forecast:   N/A   Previous:  -0.4%
Money Supply (M2)     10/1  Forecast:   N/A   Previous:-$66.9B

Friday, 10/12/01

Producer Price Index   Sep  Forecast:    0.1% Previous:   0.4%
PPI ex. food & energy  Sep  Forecast:    0.1% Previous:  -0.1%
Retail Sales           Sep  Forecast:   -0.8% Previous:   0.3%
Retail Sales ex. Auto  Sep  Forecast:   -0.6% Previous:  -0.5%
Michigan Sentiment     Oct  Forecast:    72.0 Previous:   81.8


==================
  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
ARMHY     Arm Holdings Plc          12.75  +0.67
PC        Perez Companc Sa           9.97  +0.59
PPP       Pogo Producing Co         26.04  +1.03
TMBR      Tom Brown                 23.27  +0.66
IPCR      Ipc Holdings              28.25  +0.55

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

Ticker    Company Name              Close  Change
SBUX      Starbucks                 16.96   +1.89
JNPR      Juniper Networks          15.08   +1.81
NXTP      Nextel                     8.14   +1.67
EMLX      Emulex Corp               16.40   +1.71
MUSE      Micromuse Inc              8.93   +1.50

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

Ticker    Company Name              Close  Change
AEG       Aegon Nv                  26.53  +1.10
ETN       Eaton Corp                65.69  +1.59
QLGC      Qlogic                    27.50  +1.91
PPP       Pogo Producing Co         26.04  +1.03
EDMC      Education Management Corp 34.13  +1.49

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

Ticker    Company Name              Close  Change
QCOM      Qualcomm                  38.46  -3.54
WFC       Wells Fargo               43.05  -1.20
BAC       Banc of America           56.13  -2.76
ONE       Bank One Corp             29.55  -2.01
FBF       Fleetboston Financial     33.65  -1.42

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

Ticker    Company Name              Close  Change
TEF       Telefonica Sa             32.09  -0.56
WFC       Wells Fargo               43.05  -1.20
STI       Suntrust Banks            63.77  -2.21
WB        Wachovia Corp             28.65  -2.17
SNV       Synovus Financial         25.92  -1.14


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=================================================================
DISCLAIMER
=================================================================

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

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

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



DISCLAIMER

Option Investor Inc is neither a registered Investment Advisor nor a Broker/Dealer. Readers are advised that all information is issued solely for informational purposes and is not to be construed as an offer to sell or the solicitation of an offer to buy, nor is it to be construed as a recommendation to buy, hold or sell (short or otherwise) any security. All opinions, analyses and information included herein are based on sources believed to be reliable and written in good faith, but no representation or warranty of any kind, expressed or implied, is made including but not limited to any representation or warranty concerning accuracy, completeness, correctness, timeliness or appropriateness. In addition, we do not necessarily update such opinions, analysis or information. Owners, employees and writers may have long or short positions in the securities that are discussed.

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