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Daily Newsletter, Thursday, 10/11/2001

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PremierInvestor.net Newsletter               Thursday 10-11-2001
                                                  section 1 of 2
Copyright  2001, All rights reserved.
Redistribution in any form is strictly prohibited.

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In section one:

Market Wrap: S&P 500 and NASDAQ reclaim pre-attack levels
Market Sentiment: Going, Going...
Play-of-the-Day: Riding The Wave of the Future
Watch List: NETA, ELNK, INHL, EMLX, BSC, LEH, LAF, MMM


-----------------------------------------------------------------
U.S. Market Numbers
-----------------------------------------------------------------
MARKET WRAP  (view in courier font for table alignment)
-----------------------------------------------------------------
       10-11-2001           High     Low     Volume Advance/Decline
DJIA     9410.45 +169.59  9432.04  9242.63  1.66 bln   1982/1128
NASDAQ   1701.47 + 75.21  1701.48  1649.55  2.47 bln   2448/1194
S&P 100   563.39 +  8.63   564.78   554.76   Totals    4430/2322
S&P 500  1097.43 + 16.44  1099.16  1080.99
RUS 2000  431.04 +  9.38   433.10   421.66
DJ TRANS 2314.80 + 86.19  2318.11  2228.65
VIX        32.64 -  0.82    33.18    31.70
VXN        61.65 -  4.54    66.36    61.11
TRIN         .63
Put/Call Ratio       .62
-----------------------------------------------------------------

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

S&P 500 and NASDAQ reclaim pre-attack levels

By session's end, both the S&P 500 (SPX.X) and NASDAQ Composite 
(COMPX) have regained their pre-terrorist attack levels and as 
equity bulls continue to push stocks higher.  There was a lot of 
green on the screen and has many wondering, "can it get any 
better?"

It could.  In after hours trading, shares of Juniper Networks 
(NASDAQ:JNPR) jumped nearly 24% to $20.77 after posting a regular 
session gain of 10.9% to close at $16.64.  The Internet router 
maker posted pro forma earnings of 10 cents a share, beating 
analysts estimates of 7 cents a share.  Including charges, 
Juniper reported a net loss of $29.7 million or 9 cents a share, 
compared with net income of $58.1 million, or 17 cents a share in 
the year-ago period.

Juniper Networks - last nine months





It's been a rough 9 months for Juniper Networks (JNPR) 
shareholders as the stock this year alone has fallen from the 
$126 level.  I've tried to fit a retracement bracket on the stock 
to give traders some type of clue for levels to be monitoring 
going forward.  We get some very good correlation at the $28.50 
level so I'm going to fit retracement near that level.  I like 
the way the 19.1% retracement acted like support in late August, 
and when that was broken it had been acting like resistance over 
the past four sessions.  If this is the "turning point" then a 
bullish trader trading the stock from here will want to have a 
stop set below the $15.92 level and targeting the 38.2% 
retracement level near $28.50.  I will note here that the point 
and figure chart gave a double top buy signal $13 and current 
vertical count gives traders a longer-term bullish price 
objective of $27.50.  Pretty close to our 38.2% retracement level 
(give or take $1).  First sign of trouble on the point/figure 
chart would be a trade at $14 (double bottom sell signal).

Every trader/investor has a risk tolerance

It pains me to even mention shares of Juniper (JNPR) at this 
point, but the news their will help provide some hope to 
networking stocks tomorrow.  I personally don't like trying to 
buy stocks that are gapping up nearly 20% at the opening of 
trading with a stop so far below.

I consider myself a "pattern" trader.  I'm a trader (sometimes 
I'm an investor in my IRA) that searches out different 
supply/demand characteristics that fits the market environment 
where I can put some market psychology to work.  If I can answer 
two questions and come up with the same answer, then I feel 
better about the trade/investment.  "What would a short be 
doing?" is one question and "What would a bull be doing?" is the 
other.  When the answer is buy or sell at a particular level, 
then all the better.  If the trade then fits my risk/reward 
profile, then the trade gets the thumbs up.

PeopleSoft Chart - 





Terrorist attacks aside, the market environment right now is very 
similar to that found in April of last year.  So was the chart of 
PSFT and this type of action is what I like to see.  It's very 
easy for traders/investors to have said "I should have bought 
PSFT back in April at the $27 level."  There were some strikingly 
similar comparisons in the bar chart, based off of similar 
retracement levels.  The market environment was prime this 
morning for bears to rush in and cover, it was also a good 
morning for bulls to add to positions that they may have been 
accumulating in the $24-$26 range with a stop just below 
retracement.

When Treasury bonds saw selling (causing YIELD to rise) before 
stocks even opened for trading, shares of PSFT got the "double 
whammy" of buying (shorts covering and bulls buying) and the 
stock easily outperformed the major indexes with a 12% gain.

In just a matter of days....

In just a matter of days, one may argue that bearish traders are 
just as jittery as bulls were a few weeks ago.  How quickly 
things can change.  Remember that.... HOW QUICKLY THINGS CAN 
CHANGE!

I learned a long time ago that it does little good to try and 
argue with a bull or bear.  Each has their points.  Right now the 
bears are saying, "The economy is just as bad as it was before 
September 11th and there is still the threat of further terrorist 
activities."  I can't argue with either point.

A bull is saying, "Yes, but you forget the MARKET is forward 
looking and is very proficient at factoring in economic data and 
usually moves far ahead of economic data."  I can't argue against 
this point either.

I've become so sick of listening to economists and market 
technicians say "we found the bottom back on ....."  I think I've 
heard at least 5 different bottoms called over the past 18-
months.  Mind you, we also heard 5 or 10 different tops called 
from 1995 to 2000 and many of those were wrong.

For some traders, it is of utmost importance to "know for sure" 
that everything is bullish, or that "everything is bearish" 
before they trade or invest.  I would never tell anyone to 
invest/trade if they're uncertain about things, but sometimes the 
risk/reward and set-up is favorable for committing money to a 
trade.

There's an old saying that the term "investing" is defined as "a 
short-term trade gone bad."  For those investors that don't like 
a stock because it simply looks like a trade, I'd argue that the 
term "investing" is defined as "a short-term trade gone good."  
In April of this year, would it have been wise for an investor to 
have bought PSFT at $27 when the economic environment was in the 
tank?  It was, even if you sold early at $30.37, or later at 
$34.31 or $38.24 or $44.62.

Right now I do think a trader and investor can't ignore the 
possibility of future terrorist attacks.  Unfortunately, we may 
have to live with this type of reality for sometime.  This is 
"risk" and the only way we can control this type of "risk" is to 
trade strategically.

A trader/investor that is willing to mix in some bearish trades 
along with bullish trades will most likely have some protection 
against a sudden market decline.

Simply shorting a stock just to have a short position in the 
account is not a very good strategy.  A trader must use 
disciplined stops (long and short) and simply follow what has 
been working for them and avoid what hasn't been working.

Buy some insurance if you're worried about terrorism

Immediately following the terrorist attacks, I wrote an article 
on "hedging."  I think we can use that strategy today to help 
"insure" any new positions taken on in our accounts.  For 
instance, a trader that truly felt conviction in a bullish trade 
this morning in PSFT may have not taken the trade because of the 
"risk" of future terrorist attacks.  We can use protective put 
options to help "insure" against a decline in a stock by buying a 
protective put option.  Yes, it's an additional cost, but we're 
removing some risk from the underlying bullish position with a 
protective put.

Think about this... imagine that you bought 100 shares of PSFT 
this morning at $27 ($2,700 + commission).  Near the end of 
today's trading, there would have been nothing wrong with an 
investor buying a protective put like the PSFT Nov. $25 put 
(PQOWE) for $2.15 ($215 cost + commission).  This type of 
strategy would protect the investment capital until November 
16th.  This might help ease a blow against a near-term terrorist 
attack or other type of market event.  If the stock wants to run 
straight to $40, then an investor doesn't necessarily look at 
his/her put option as "blown money" as they're very happy owning 
100 shares at $27 and holding an investment worth $4,000.  At 
that point, the $215 loss in the option becomes pocket change.

Successful trading and investing isn't all about predicting every 
little event in the market.  Sometimes it is the strategies used 
that creates the success for your account.  If I knew of anything 
negative that was going to happen tomorrow, or the day after, I 
would not have talked bullish about PSFT last night and again 
this morning.  

At the same time, if we don't trade/invest because we're scared 
something might adversely affect our investment, then we're 
either investing money we can't afford to lose or investing money 
without understanding or hedging the risk.

If you're managing a retirement account and your broker gives you 
ANY argument about buying a protective put for an investment you 
hold, IMMEDIATELY ask him why he/she won't allow you to protect 
your investment.  Don't say another word.  If he/she can't give 
you a good explanation, then you might want to look for a broker 
that will allow you to protect your investment, while still 
exposing the bulk of your capital to a stock you feel will 
increase in price over time.

The argument that works best is "Look, I have fire insurance on 
my home just in case it burns to the ground, not because I think 
it will burn to the ground."

If you've got a question regarding "how to do something" then e-
mail me at the link below.  Chances are you're not the only one 
with the question.  

Jeff Bailey
Senior Market Technician


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

Going, going...
by Russ Moore

Perhaps inspired by the baseball playoffs, investors came out 
swinging for the second day in a row, taking several indices past 
their 9/10 levels.

At the closing bell, the DOW had gained +1.8 percent. The NASDAQ 
surged +4.6 percent and the NDX gained a hearty +6.5 percent. 
Volume was heavy with 1.65 billion shares traded on the NYSE and 
2.49 billion on the NASDAQ. Winners pounded losers by a 19/12 
margin on the big board and 25/12 on the tech index.

General Electric met third quarter earnings estimates and was a 
strong catalyst for an investing public that is growing horns at 
a rapid rate. Over on the NASDAQ, Yahoo (YHOO) matched third 
quarter estimates and said that it expects to meet fourth quarter 
targets.

On top of the in-line earnings announcements, jobless claims 
showed a decline of -67,000 to 468,000, far better than the 
541,000 expected.

Drugs, gold, oil, healthcare, utility and oil sectors were among 
the few to finish in the red.

After the bell, Juniper Networks did its part to boost the 
networkers after coming out with a pro-forma profit of 10 cents a 
share, 3 cents better than First Call estimates. The stock was 
making a big move in after hours trading.

The last two days have made it clear that the Bulls are currently 
in charge. Overseas efforts appear to be progressing well and so 
far, earnings have not been disastrous. However, for as long as 
we are operating under an “event risk” cloud, sentiment could 
change on a dime. Caution is the word.


VIX 
Thursday 10/11 close: 32.64


VXN
Thursday 10/11 close: 61.65

30-yr Bonds
Thursday 10/11 close: 5.41

Total Put/Call Ratio: .62


Equity Option Put/Call Ratio: .52


Index Option Put/Call Ratio:  1.11


===

NASDAQ 100 Index (NDX/QQQ)
52-Week High: 103.51
52-Week Low:   28.19
Current close: 34.70

Volume/Open Interest
Maximum calls: 30/89,475
Maximum puts : 30/72,210

Moving Averages
 10 DMA 31
 20 DMA 30
 50 DMA 35
200 DMA 45

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: 563.39

Volume/Open Interest
Maximum calls: 600/6,481
Maximum puts : 500/8,100

Moving Averages
 10 DMA  545
 20 DMA  532
 50 DMA  573
200 DMA  628

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: 1097.43

Volume / Open Interest
Maximum calls: 1050/17,218
Maximum puts : 1050/23,844

Moving Averages
 10 DMA 1064
 20 DMA 1043
 50 DMA 1123
200 DMA 1219

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:  9,410.45

Volume / Open Interest
Maximum Calls: 100/27,223
Maximum Puts   100/38,720

Moving Averages:
 10 DMA  9,071
 20 DMA  8,901
 50 DMA  9,721
200 DMA 10,362

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: 500.02

Volume / Open Interest
Maximum Calls: 520/ 318
Maximum Puts:  440/2002

Moving Averages
 10 DMA 464
 20 DMA 452
 50 DMA 492
200 DMA 543

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: 474.60

Volume / Open Interest
Maximum Calls: 490/2,871
Maximum Puts:  390/2,130

Moving Averages
 10 DMA 402
 20 DMA 408
 50 DMA 512
200 DMA 591

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: 392.51

Volume / Open Interest
Maximum Calls: 400/705
Maximum Puts:  360/628

Moving Averages
 10 DMA 393
 20 DMA 383
 50 DMA 388
200 DMA 396

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

(new bullish play for Net Bulls tech sector)

Harmonic Inc. - HLIT - close: 10.18 change: +1.53 stop: 9.40

Company Description:
Harmonic is a leading provider of innovative broadband solutions 
that deliver video, voice and data to communications providers 
around the world. Harmonic's technically advanced fiber optic, 
digital video and IP data delivery systems enable network 
operators to provide a range of interactive and advanced digital 
services that include high-speed Internet access, telephony, 
digital video, HDTV, video & audio streaming, and video-on-
demand. 

Fundamentals:
As most investors know current economic conditions have not been
kind to telecom equipment and Internet broadband companies.
As of the six months ending June 29th, 2001, HLIT's sales were
down almost 40% to less than $90 million.  At the same time,
net losses rose 7% to almost $83 million.  Current consensus
estimates place HLIT's next quarter at -0.24 per share.  
Unfortunately for shareholders HLIT tends to do worse than the
estimates if you don't count last June's numbers.  If you're
looking for valuations, HLIT has no P/E to speak of but they
are trading at considerably less than the industry's Price to
Sales.

Why We Like It:
Before we tell you why we like it let us tell what we don't like
about it.  This is a real trader's play and not for the faint 
hearted or slow to recognize when a trade turns against you.  
The stock has already made great gains from its Sept/Oct lows
and Thursday's session added almost 18%.  Anything up that much
in one day is not to be traded lightly.  Fortunately, by following
closely to suggestions to action points and potential stop losses
we hope to minimize the risks.  Now, why do we like it?  The April
lows for this stock was $2.75 on April 9th, 2001.  About two 
months later the stock hit a high of $14.  That's a heck of a move
and one we'd like to catch again.  Please take a careful look at
the chart and you'll see how volatile shares can be.  The month
of August saw the stock fighting to breakout above resistance at
$17.  The last attempt was a strong rally up from a mid-August 
low of $13.  Those are some big moves that would be hard for many
investors to stomach.  Now shareholders find themselves with a stock
that has dropped from $17 to $6.50 by late September.  

We know this is easily observed on the chart but many times traders 
don't take the time to fathom how painful that move was if you don't 
trade with stops.  The market excitement last week sent shares up to 
10.59 before profit taking brought the stock back to base for a few 
days at $8.00.  Today's move is without a doubt very strong.  Volume 
was big, the stock closed near its high for the day setting new 
intraday support at 9.50.  Shares closed over the 200-dma and price 
resistance at $10.  These are a lot of positives.  MACD turned 
positive on Oct. 4th and has been growing stronger.  

Looking at the Point and Figure chart for HLIT shows that a trade to 
$11 would confirm the new bullish trend.  The PnF chart also shows 
the first level of major resistance at $13.  We confirm this 
resistance at $13 with both the stock price (see the dip on Aug. 23) 
as well as a retracement level of 61.8% using the late August to 
early October drop.  

Okay, enough with the history lesson.  We would NOT open a long trade
on this play unless two events occurred.  Number one.  Shares of HLIT
trade above the $10.45 level.  Using a 60 minute chart one can see the
200-period MA is at 10.43 while the retracement level of 38.2% resides
at 10.40 (of the same move we discussed above).  A move above this
level would be confirmation and at that point we'd go long.  The 
first hurdle will be the 11.50 area but our target is 12.85 to 13.00.
The second event that would make us consider a new long position would
be a drop back to $9.00 (or maybe 8.75) but we would wait for the 
bounce to begin.  If this occurred our first target would be 10.40.
Now the newsletter can't have it both ways so we're focusing on 
potential entry number one.  Since this is an end-of-day email we
have to use today's close at 10.18 to be our entry point.  We're
going to place a stop at 9.40 which is about 10 cents below Friday's
intraday support.  Remember, don't trade this if you can't stand
the heat.  Earnings are expected on October 24th and we'll probably
close the play before they announce.

Picked on October 11th at $10.18
Gain since picked:         +0.00
Earnings Date              10/24 (not confirmed)






==================================================================
WATCH LIST
==================================================================

COMMENTS:
With the markets on the move and investors moving their money
again we're definitely seeing some sector rotation.  Normally
we don't produce a Watch List on Thursday nights but we wanted
to highlight a few stocks that were displaying some intriguing
patterns.  We've not researched the news nor have we looked for
up coming earnings announcements.  Use this as a special 
"trading ideas" section similar to the daily document we do
produce.  

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


Network Associates - NETA - close: 18.00 change: +1.85

NOTE: Wow!  What a move today.  NETA was up 11.45% ahead of its
earnings report after the close today.  The stock had been fighting
a triple top at resistance of $17.  Already producing a strong 
move for the month of October, shares are up from the $12 level.
This was a beautiful technical breakout and we considered it as
a new long play but shares were up to $20 in after hours trading
due to the companies positive earnings report.  We'd probably
watch it and see where it settles in a couple of days.




---

Earthlink Inc - ELNK - close: 18.65 change: +1.25

NOTE: ELNK was another high-flyer for the Internet sector.  The
MACD looks like a rocket and we're surprised there hasn't been
more profit taking from everyone who bought it in September
between $13 and $14.  Today's move pushed shares through 
mid-July resistance at $18 and it is now at a new 52-week high.




---

Inhale Therapeutic - INHL - close: 17.75 change: +1.96

NOTE: We don't know what they do but shareholders should be 
encouraged by today's breakout over resistance of $16.  Again,
we'd probably look for a dip back to $16 but bulls may not
let go of it.  Definitely need more research.




---

Emulex Corp - EMLX - close: 19.28 change: +2.15

NOTE: Up 12.55% today after gapping higher at the open.  That's
one way to deal with a pesky 50-dma that has been giving the
stock trouble all week.  Shares saw a late day dip back towards
$18 before buyers stepped in again.  Now it's looking at resistance
of $20.




---

Bear Stearns - BSC - close: 54.10 change: +1.85

NOTE: All the big brokers have been making strong comebacks and
many of them have produced bullish breakouts in the last couple
of days.  BSC broke out over $53 and its 50-dma (52.85), 200-dma
(53.73) in today's trading.  $55 proved to be too much and there
was a dip towards the end of the day.  Worth watching.




---

Lehman Brothers - LEH - close: 62.39 change: +2.59

NOTE: Shares of LEH look even better than BSC.  LEH posted a 
clear breakout over the $60 level with rising volume.  The
stock couldn't tackle its 50-dma at $63 but give it time.




---

Lafarge Corp - LAF - close: 38.81 change: +1.11

NOTE: Another breakout story, LAF struggled with resistance at 
$35 for months.  However, late August shares burst out to $38
before dipping towards $31 during the volatile September time
period.  Now shares are back and have made two big gains in
a row with a new 52-week high.




---

Minnesota Mining - MMM - close: 106.14 change: +4.30

NOTE:  The trend over the last three weeks looks very bullish.
The breakout over $100 yesterday - again bullish.  Today's 
trading up over $105 and the 50-dma - again bullish.  The
rising volume - again bullish.  HOWEVER, we're actually looking
at MMM as a potential short play.  The stock has huge resistance
at $107 (today's high) and $111, which is bolstered by the 200-dma.
A glance at the point-and-figure chart confirms these numbers
and levels.  We'd be looking for the stock to rollover soon or
at least slow down and then we can see if a bearish play develops
again.








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only. The information provided herein is not to be construed
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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
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factors beyond our control.

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

PremierInvestor.net Newsletter                  Thursday 10-11-2001
                                                     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
=================================================================
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In section two:

Split Trader
  New Plays: 
  Play Updates: THC
  Closed Plays: 

Net Bulls
  New Plays: Harmonic Inc - HLIT - bullish
  Bullish Play Updates: 
  Bearish Play Updates: 
  Closed Plays: EASI 

Stock Bottom / Active Trader
  New Plays: 
  Bullish Play Updates: BMET and MO
  Bearish Play Updates: SYY 
  Closed Plays: LMT

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 Play Updates
===============

  ----------------------
  Split Candidate Update
  ----------------------

Tenet Healthcare - THC - close: 59.56 change: -1.69 stop: 57.00

The healthcare sector slipped in Thursday's session as cyclicals
and tech stocks stole the show.  Much to the frustration of 
healthcare bulls, the HCX, which had broken above its 200-dma
yesterday, is once again under this level of resistance.  The 
index slipped to the 810 level which has been support through the
month of October.  Fortunately, the HCX did bounce from its lows.
On the other hand, shares of THC did not bounce and ended the day
near its lows at mild support above $59.  We'd like to see this
as just profit taking and a little sector rotation but traders
should remain on the alert.  USB Warburg started coverage on 
several healthcare/hospital stocks today with most of them receiving
a "buy" rating.  THC was one such stock that received a "buy" rating
but like the rest of the group (LPNT, PRHC, HCA, UHS, HMA, TRI) it
was not enough to support the share price.  All stocks mentioned
above closed down for the day.  The UBS Warburg analyst did praise
THC as one of the best turnaround stories in the industry and 
put a $75 price target on the stock.  We would be watching for THC
to dip back to $58 if the rotation out of healthcare continues
tomorrow.  A bounce at $58 could be a good entry point to go long
with a stop at $57.00.

Picked on October 4th @ $ 60.22
Gain since picked:       - 0.66
Earnings Date:            10/03 (confirmed)







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

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

  ----------------
  NEW Bullish Play
  ----------------

Harmonic Inc. - HLIT - close: 10.18 change: +1.53 stop: 9.40

Company Description:
Harmonic is a leading provider of innovative broadband solutions 
that deliver video, voice and data to communications providers 
around the world. Harmonic's technically advanced fiber optic, 
digital video and IP data delivery systems enable network 
operators to provide a range of interactive and advanced digital 
services that include high-speed Internet access, telephony, 
digital video, HDTV, video & audio streaming, and video-on-
demand. 

Fundamentals:
As most investors know current economic conditions have not been
kind to telecom equipment and Internet broadband companies.
As of the six months ending June 29th, 2001, HLIT's sales were
down almost 40% to less than $90 million.  At the same time,
net losses rose 7% to almost $83 million.  Current consensus
estimates place HLIT's next quarter at -0.24 per share.  
Unfortunately for shareholders HLIT tends to do worse than the
estimates if you don't count last June's numbers.  If you're
looking for valuations, HLIT has no P/E to speak of but they
are trading at considerably less than the industry's Price to
Sales.

Why We Like It:
Before we tell you why we like it let us tell what we don't like
about it.  This is a real trader's play and not for the faint 
hearted or slow to recognize when a trade turns against you.  
The stock has already made great gains from its Sept/Oct lows
and Thursday's session added almost 18%.  Anything up that much
in one day is not to be traded lightly.  Fortunately, by following
closely to suggestions to action points and potential stop losses
we hope to minimize the risks.  Now, why do we like it?  The April
lows for this stock was $2.75 on April 9th, 2001.  About two 
months later the stock hit a high of $14.  That's a heck of a move
and one we'd like to catch again.  Please take a careful look at
the chart and you'll see how volatile shares can be.  The month
of August saw the stock fighting to breakout above resistance at
$17.  The last attempt was a strong rally up from a mid-August 
low of $13.  Those are some big moves that would be hard for many
investors to stomach.  Now shareholders find themselves with a stock
that has dropped from $17 to $6.50 by late September.  

We know this is easily observed on the chart but many times traders 
don't take the time to fathom how painful that move was if you don't 
trade with stops.  The market excitement last week sent shares up to 
10.59 before profit taking brought the stock back to base for a few 
days at $8.00.  Today's move is without a doubt very strong.  Volume 
was big, the stock closed near its high for the day setting new 
intraday support at 9.50.  Shares closed over the 200-dma and price 
resistance at $10.  These are a lot of positives.  MACD turned 
positive on Oct. 4th and has been growing stronger.  

Looking at the Point and Figure chart for HLIT shows that a trade to 
$11 would confirm the new bullish trend.  The PnF chart also shows 
the first level of major resistance at $13.  We confirm this 
resistance at $13 with both the stock price (see the dip on Aug. 23) 
as well as a retracement level of 61.8% using the late August to 
early October drop.  

Okay, enough with the history lesson.  We would NOT open a long trade
on this play unless two events occurred.  Number one.  Shares of HLIT
trade above the $10.45 level.  Using a 60 minute chart one can see the
200-period MA is at 10.43 while the retracement level of 38.2% resides
at 10.40 (of the same move we discussed above).  A move above this
level would be confirmation and at that point we'd go long.  The 
first hurdle will be the 11.50 area but our target is 12.85 to 13.00.
The second event that would make us consider a new long position would
be a drop back to $9.00 (or maybe 8.75) but we would wait for the 
bounce to begin.  If this occurred our first target would be 10.40.
Now the newsletter can't have it both ways so we're focusing on 
potential entry number one.  Since this is an end-of-day email we
have to use today's close at 10.18 to be our entry point.  We're
going to place a stop at 9.40 which is about 10 cents below Friday's
intraday support.  Remember, don't trade this if you can't stand
the heat.  Earnings are expected on October 24th and we'll probably
close the play before they announce.

Picked on October 11th at $10.18
Gain since picked:         +0.00
Earnings Date              10/24 (not confirmed)







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

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

Engineered Support Sys. - EASI - cls: 46.93 chg: -4.32 stop: 49.50

Defense stocks also suffered from a one-two combination of 
money rotating into tech and cyclical stocks in addition to
a steep round of profit taking from its post-Sept. 11th run up.
This play did not turn out as beneficial as we had hoped 
despite the rally to a high of $58.00 four days ago.  Long
term investors may want to keep an eye on it.  If the stock
dips back to $40 that may be an area longer-term investors
could look for stronger support.  If the war on terrorism really
does become a prolonged operation as the President commonly
tells us this may be one stock worth evaluating for a position
in your portfolio.

Picked on October 4th @ $53.50
Gain since picked:      - 4.00
Earnings Date:             N/A 






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

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

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

Biomet Inc - BMET - close: 31.05 change: -0.18 stop: 29.00

Biomet was another victim of sector rotation out of defense
stocks in the healthcare sector and into techs and cyclicals.
Fortunately, BMET displayed its relative strength versus others
in the industry and merely dipped to support before bouncing
higher at the close.  We had actually discussed looking for
another dip to $30 as an entry point.  This may have been it.
However, the 31.50 level is becoming more of a barrier than
anticipated.  Confirm stock, sector and market direction before
initiating any new plays.  It's possible that if the markets
dip tomorrow in profit taking ahead of the weekend, healthcare
stocks might get another bounce...but this is just speculation.
We will leave our stop at $29.00 for now.

Picked on October 2nd at $30.35
Gain since picked:        +0.70
Earnings Date             09/20 (confirmed)




---

Phillip Morris - MO - close: 51.02 change: -0.29 stop: 49.25 

Shares of MO have been as strong as ever this week.  They keep
climbing slowly while ignoring most of the market volatility.
Now that shares have busted through resistance at $50 the
up trend remains intact and the stock should continue to attract
buying interest.  Looking at an intraday chart from September
21st on we see how MO has been trading in a very narrow ascending
channel.  The dip today to 50.53 was near the bottom of that
channel and buyers stepped back in towards the close.  We do
think that MO is a long play here and any dip back to $50.
However, be aware that $52 is overhead resistance and last time
the stock took its time getting through similar hurdles.  The
market expects MO to announce earnings on October 17th and
we will consider dropping the play before the earnings announcement.
Patient traders may want to wait until after the earnings report
before committing any money.

Picked on August 30th at $47.94
Gain since picked:        +3.08
Earnings Date             10/17 (confirmed)





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

Sysco Corp - SYY - close: 25.25 change: -0.64 stop: 26.50

The broad market rally on Wednesday had us a little spooked
as shares of SYY rallied strongly up to resistance at $26.
Fortunately, SYY showed its true colors today dropping at the
open while the markets continued running for another day.
The $25 level has been support for the month of October 
(minus a brief trade to 24.85 on Oct. 9th) and we need to 
see SYY close below this level to confirm the down trend.
Wait for the stock to close below $25 if you're looking for
confirmation.  The challenge is that SYY normally doesn't move
that fast and we'll probably see shares stall again at $24.
The company does have earnings coming up next week on the 
18th.  We prefer to not hold over earnings as a surprise
either way could prove hazardous to our trading account.
Use your own judgement on whether you think it is wise to
hold a short play over SYY's earnings announcement.  One
would expect there to be a shortfall as the events of September
have put a huge dent in the restaurant business for a lot
of major cities and SYY is sure to feel it.  Despite these
observations we're still not comfortable holding over the
earnings report as they may have a positive conference call
afterwards that could strongly affect stock direction.

Picked on October 5th at $26.12
Gain since picked:        +0.87
Earnings Date             10/18 (not confirmed)






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

  -------------------
  Closed Bullish Play
  -------------------

Lockheed Martin - LMT - close: 46.39 change: -0.97 stop: 46.50

Like shares of other defense high-flyers (GD, NOC, EASI), LMT
suffered another day of profit taking as investors rotated into
tech and cyclicals.  Considering the strong move up from $38
to almost $50 since the attacks traders should not be surprised
to see profit taking.  We were fortunate to have caught the play
at 43.50.  LMT came right back to previous resistance at $46
and its 10-dma.  Longer-term investors may want to watch this
area for a new bottom at $46 but if profit taking continues we
could see LMT trade to the $42 level.  Speculators can hang in
there and bet on whether LMT will win the $500 billion Joint
Strike Fighter bid for the government but think about how much
you're willing to risk on that bet.  Boeing is steep competition.
Granted the reward is pretty big, the $500 billion price tag
is five times the combined market cap of both BA and LMT combined.
Whomever wins will likely see their stock gap up the next day
and whomever loses will probably see their stock gap down but
again we're just speculating.  The Pentagon is expected to announce
their decision by October 26th, 2001.  Whether LMT wins the bid
on the project or not, the company will probably enjoy a steady
stream of new business from the government with our new war on
terrorism.

Picked on September 27th at $43.30
Gain since picked:          + 3.20
Earnings Date                10/25 (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 

TLGD    Tollgrade Communications   28.75     +1.70
TECD    Tech Data Corp             45.18     +3.07
LEH     Lehman Brothers            62.39     +2.59
DAL     Delta Air Lines            27.83     +0.65
DOV     Dover Corp                 33.31     +1.36


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

Ticker  Company Name               Close     Change 

CSCO    Cisco Systems              16.46     +1.31
ELNK    Earthlink                  18.65     +1.25
JDSU    JDS Uniphase                8.95     +1.46
DRXR    Drexler Technology         19.00     +1.20
MUSE    Micromuse Inc              10.16     +1.07

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

Ticker  Company Name               Close     Change 

TXN     Texas Instruments          30.85     +2.30
QCOM    Qualcomm                   49.68     +4.78
CCU     Clear Channel Comm         43.74     +2.74
STM     Stmicroelectronics         28.34     +1.38
SNE     Sony Corp                  39.96     +2.96


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

Ticker  Company Name               Close     Change 

FRE     Freddie Mac                64.68     -2.07
FNM     Fannie Mae                 77.60     -2.85
BTY     British Telecom            50.14     -5.32
ALL     Allstate Corp              32.85     -3.43
GD      General Dynamics           88.00     -2.00

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

Ticker  Company Name               Close     Change 

MCK     McKesson Corp              36.43     -1.79
ORI     Old Republic               26.03     -0.37
LLL     L-3 Communications         92.59     -1.91
ATPX    Advanced Technical Prod    21.70     -2.80




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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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Copyright  2001  PremierInvestor.net. and
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Do not duplicate or redistribute in any form.


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