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Daily Newsletter, Tuesday, 10/16/2001

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PremierInvestor.net Newsletter                 Tuesday 10-16-2001
                                                   section 1 of 2
Copyright © 2001, All rights reserved.
Redistribution in any form is strictly prohibited.

The entire newsletter is best viewed in COURIER 10 for alignment
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In section one:

Market Wrap: IBM and Intel get after-hours spotlight
Market Sentiment: SeeSaw markets end on the plus side.
Play-of-the-Day: Chips Ahoy!

-----------------------------------------------------------------
U.S. Market Numbers
-----------------------------------------------------------------
MARKET WRAP  (view in courier font for table alignment)
-----------------------------------------------------------------
       10-16-2001           High     Low     Volume Advance/Decline
DJIA     9384.23 + 36.61  9411.14  9298.70  1.2 bln   1965/1139
NASDAQ   1722.07 + 25.76  1722.85  1690.54  1.8 bln   2169/1434
S&P 100   564.14 +  3.71   566.83   558.74   Totals   4134/2573
S&P 500  1097.54 +  7.56  1101.66  1087.13
RUS 2000  434.53 +  4.44   434.54   430.09
DJ TRANS 2297.72 + 34.46  2302.68  2262.94
VIX        35.04 -  2.32    37.91    34.95
VXN        64.01 -  2.23    67.52    63.98
TRIN        0.90
Put/Call Ratio       .70
-----------------------------------------------------------------

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

IBM and Intel get after-hours spotlight

Two technology heavyweights reported earnings after today's 
closing bell and both met analysts expectations for their recent 
quarters.

After the bell, "Big Blue" reported earnings of 90 cents a share, 
which was down from $1.08 in the year-ago period, but just above 
the 89 cents a share that analysts polled by Thomson 
Financial/First call were looking for.  Analysts estimates ranged 
from $0.82-$0.95.

International Business Machines (IBM) 




Shares of IBM have had a nice rally ahead of today's earnings as 
the stock closed at $101.85.  While today's earnings show IBM 
earning dropping approximately 19% and revenues declining 6% 
versus year-ago quarter, shares of IBM are currently trading down 
approximately 10% from year ago levels of $113.  At this point, 
we're not hearing too many negatives come from the conference 
call with analysts and IBM's CFO says analysts 4th quarter 
estimates are "reasonable."  Given the fact that IBM didn't 
completely miss analyst's estimates, we'd expect support to be 
firming for IBM at the $95 level going forward.  A break below 
the $94-95 level would suggest technical weakness in the chart of 
IBM, which could only be explained by further economic slowing.

Intel Inside

You can't talk about computer without discussing chips from Intel 
(NASDAQ:INTC).  Today, the worlds largest chipmaker, reported net 
income of $106 million (including charges), or 2 cents a share, 
on revenue of $6.5 billion.  Excluding charges, Intel would have 
reported earnings of $655 million, or 10 cents a share, which was 
right in line with analyst's estimates.  Revenue for the current 
quarter were a slightly higher than analysts estimates of $6.4 
billion.  Gross margins fell from previous quarter levels at 46% 
(gross margins for quarter ending June were 48%), but the company 
said they feel gross margins should hold near the 47% level for 
the fourth quarter ending in December.

Intel Chart - last nine months




I think it is interesting to compare the downward trends from 
Intel's high and that of IBM's.  In September of 2000, Intel 
traded at a high near $75 and today's close has the stock down 
some 66% from those levels, while IBM is down a "measly" 24% from 
its September 2000 highs.  One might conclude that Intel is 
dependent on IBM's future to a greater extent.  This perhaps 
gives us something to think about from here.  

If Intel is DEPENDENT on IBM and other computer manufacturers for 
its well-being, then who might be dependent on Intel for their 
future well-being?  I've written about this before and it lays 
the groundwork for a potential trade in the coming sessions.  

Current after-market response form IBM is starting to build to 
the bullish side with the stock trading $5 higher than today's 
close of $101.85 (trading in after-hours at $106.06).  While I 
like to see what the real market is doing during regular hours 
when all market participants are able to trade, current bias 
toward tomorrow morning could be bullish.

Intel is also starting to tick higher in after-hours trading at 
$25.65, after having finished the normal trading session at 
$24.96.  

BIG equipment

Here's what I'm looking at for a potential bullish trade in 
technology for tomorrow morning.  We'll have to see if things 
hold overnight, but a bullish trader may want to take a look at 
shares of Applied Materials (NASDAQ:AMAT) as a potential short-
term bullish trade based on some of the news we got after today's 
close of trading and things we're seeing in the after-market.

Applied Materials - last nine months




It's notable that Applied Materials (NASDAQ:AMAT) set a 52-week 
high back in April of 2000, which was 5 months PRIOR to IBM and 
Intel's peaks.  I'd argue that Applied Material's (AMAT) fortunes 
are tied to Intel's and Intel's fortunes are tied somewhat to 
IBM's.  

If AMAT gave the "head's up" to a decline back in April (5-months 
ahead of IBM and INTC's highs) then perhaps AMAT has some 
catching up to do.  

On Monday, shares of AMAT traded "inside" of Friday's range 
($32.74-$34.09) and today's move above the $34.09 level and just 
above our "fitted" retracement bracket's 61.8% retracement of 
$34.13 leaves AMAT looking rather bullish short-term.  

I like a bullish trade tomorrow morning in shares of AMAT to try 
and play some "domino theory" based on IBM and Intel bullishness 
after their eagerly anticipated earnings have been announced.  I 
think bullish traders (if not market makers) will be targeting 
some bullish upside to the $38.83 level, and further bullishness 
follow through in IBM or INTC in the following trading sessions 
could have AMAT jumping to the $43 level.  Using the "inside day" 
technique, a bullish trader could follow with a stop just below 
$32.75 and then move that stop up under the previous days low 
until stopped out or your bullish target is achieved.

"The Inside Day" trading technique is explained in the "Bailey's 
Basics" section of PremierInvestor.net.

Jeff Bailey
Senior Market Technician



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

SeeSaw markets end on the plus side.
by Russ Moore

It was a colorful day on Wall Street with the major indices 
flashing red and green arrows throughout the session. Late day 
buying saw the DOW move into the green for good, and end with a 
gain of +0.4 percent. The NASDAQ added +1.5 percent and the NDX 
tacked on +1.9 percent.

Volume improved over yesterday’s showing with the NYSE doing 1.21 
billion shares and the NASDAQ moving 1.82 billion shares. Winners 
were in control with a 20/11 victory on the big board and a 22/14 
difference on the tech index.

Natural gas, oil service, gold, financial, utility, Internet and 
networking sectors were the cream of the crop on a day when all 
sectors finished on the upside.

Industrial production slipped for the twelfth month in row, 
declining -1.0, slightly more than the -0.8 expected. Capacity 
utilization at 75.5 percent marked the lowest level since 1983.

After the bell big blue (IBM) announced an EPS of 90 cents, 
beating the street by a penny. The stock was moving north on the 
news. Intel came out in-line with estimates but warned of a 
possible decline in sales for the fourth quarter. The stock was 
trading down in after-hours action.

Despite the weak economic data, and a bevy of earnings 
announcements, some good, some not so good, investors were more 
interested in buying than selling. Bullish sentiment, at least on 
a retail level continues to grow, perhaps, under the belief that 
the worst is over and the future can only get brighter. As we 
know, however, investor sentiment is fickle, and prone to change 
in a heartbeat. A negative surprise of any proportion could put a 
serious dent in the upside momentum.



VIX 
Tuesday 10/16 close: 37.15


VXN
Tuesday 10/16 close: 66.24


30-yr Bonds
Tuesday 10/16 close: 5.37


Total Put/Call Ratio: .70


Equity Option Put/Call Ratio: .58


Index Option Put/Call Ratio:  1.47


===

NASDAQ 100 Index (NDX/QQQ)
52-Week High: 103.51
52-Week Low:   28.19
Current close: 34.96

Volume/Open Interest
Maximum calls: 30/86,020
Maximum puts : 33/90,596

Moving Averages
 10 DMA 32
 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: 564.14

Volume/Open Interest
Maximum calls: 600/8,583
Maximum puts : 500/8,356

Moving Averages
 10 DMA  553
 20 DMA  536
 50 DMA  569
200 DMA  626

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: 1097.54

Volume / Open Interest
Maximum calls: 1050/17,602
Maximum puts : 1050/24,628

Moving Averages
 10 DMA 1079
 20 DMA 1046
 50 DMA 1113
200 DMA 1214

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:  9,384.23

Volume / Open Interest
Maximum Calls: 100/27,519
Maximum Puts   100/38,706

Moving Averages:
 10 DMA  9,215
 20 DMA  8,933
 50 DMA  9,656
200 DMA 10,345

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: 509.10

Volume / Open Interest
Maximum Calls: 520/ 308
Maximum Puts:  440/2003

Moving Averages
 10 DMA 478
 20 DMA 458
 50 DMA 491
200 DMA 542

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: 462.73

Volume / Open Interest
Maximum Calls: 450/2,847
Maximum Puts:  390/2,132

Moving Averages
 10 DMA 431
 20 DMA 407
 50 DMA 504
200 DMA 589

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: 397.73

Volume / Open Interest
Maximum Calls: 400/605
Maximum Puts:  360/628

Moving Averages
 10 DMA 394
 20 DMA 385
 50 DMA 389
200 DMA 395

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 10/12
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 
9/25/01      357,873   407,036   (49,163)   (24.9%)
10/02/01     365,200   408,567   (43,367)   (11.7%)
10/09/01     369,049   407,804   (38,755)   (10.6%)

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
9/25/01        122,613    71,721    50,892     (29.7%)
10/02/01       124,249    73,882    50,367      (1.1%)
10/09/01       122,292    74,539    47,753      (5.2%)

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 
9/25/01       26,761    36,812   (10,051)   (1.8%)
10/02/01      26,703    37,699   (10,996)    9.4%
10/09/01      24,662    38,020   (13,358)   21.5%

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
9/25/01        10,699     6,580    4,119     251.0%)
10/02/01       10,918     6,804    4,114      (0.1%)
10/09/01       11,948     7,012    4,936      20.0%

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

DOW JONES INDUSTRIAL
Commercials   Long      Short      Net     %Change 
9/25/01       20,013     7,806   12,207     (8.5%)
10/02/01      22,755    10,124   12,631      3.5%
10/09/01      24,873    10,194   14,679     16.2%

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
9/25/01        4,530    12,621    (8,091)      4.9%
10/02/01       4,731    11,868    (7,137)    (12.1%)
10/09/01       3,517    12,294    (8,777)     23.0%
 
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        +47,753     +50,367        -38,755     -43,367

Total Open
Interest %       (+24.26%)  (+25.42%)     (-4.99%)   (-5.60%)
                 net-long   net-long      net-short  net-short


                     Small Specs             Commercials
DJIA futures     (Current) (Previous)    (Current) (Previous)
Open Interest
Net Value          -8,777     -7,137          +14,679    12,631
Total Open
interest %       (-55.51%)    (-43.00%)      (+41.86%)  (+38.42%)
                 net-short   net-short     net-long    net-long


                     Small Spec              Commercials
NASDAQ 100      (Current) (Previous)    (Current) (Previous)
Open Interest
Net Value         +4936      +4114         -13,358    -10,996

Total Open
Interest %        (+26.03%)   (+23.21%)     (-21.31%) (-17.07%)
                 net-long   net-long      net-short net-short


What COT Data Tells Us
----------------------
Indices:.Commercials have once again reduced their net-short 
positions, albeit by a small percentage. Are they moving to a 
net-long accumulation position? Only time will tell.

Gold:.Commercials continue to hold a significant number of net-
short contracts, and up until today, we did see the gold index 
fall a substantial amount. Today’s Anthrax scare had investors 
running for cover and the safety of gold once again, and the 
index enjoyed a nice gain.  .

9/18  49,456 contracts net-short
9/25  36,638 contracts net-long
10/02 67,122 contracts net-short
10/09 64,729 contracts net-short

Data compiled as of Tuesday 10/09 by the CFTC.



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


Applied Materials Inc - AMAT - close: 34.45 change: +0.81 stop: 32.45

Company Description:
Applied Materials, the largest supplier of products and services 
to the global semiconductor industry, is one of the world's 
leading information infrastructure providers. Applied Materials 
enables Information for Everyone(TM) by helping semiconductor 
manufacturers produce more powerful, portable and affordable 
chips.  (source: company press release)

Why We Like It:
You've probably heard that 80% of a stock's movement is market
or sector related.  If you've never believed that look at a chart
of AMAT and then look at a chart of the Semiconductor Index (SOX).
They appear identical, especially in recent weeks.  No one truly
knows how investors will react to Intel's earnings report tonight
as after-hours action can be erratic and misleading.  However,
given the bullish sentiment in the markets and the fact that
almost everyone has already written off the 3Q earnings season
we could see increased buying interest as investors breath a
sigh of relief that Intel's numbers were not worse.  Shares of
AMAT have been producing a steady trend higher with plenty of
opportunities for traders to buy at support and sell at resistance.
Experienced traders love stocks like this as you learn to time
your entries and exits.  AMAT was discussed in tonight's market
wrap by Mr. Bailey and we encourage to read his comments if you
have not already.  He feels that AMAT could trade to 38.83 in
the short-term which is very close to its 50-dma (38.68).  
Additionally, the stock might make it to $43 once through price
resistance at $40 given an extended rally in tech issues.  This
certainly seems possible as the point-and-figure bullish price
objective is actually $46.00.  We like it because the last couple
of days have put in a bottom at 32.75 which will allow for a 
tight stop setting up a strong risk/reward scenario.  In the
wrap, Mr. Bailey suggests a stop of 32.75.  For the newsletter
we're going to use 32.45.  This will allow for a little more
volatility on Wednesday's open as the bulls and bears try to
sort out who's in control.  Fortunately, Tuesday's close was
very bullish with the stock ending at its high for the day.
Either stop should work fine.  

Picked on October 16th at $34.45
Gain since picked:         +0.00
Earnings Date              11/13 (not confirmed)







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newsletter picks are not to be considered a recommendation
of any stock but an information resource to aid the investor
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Do not duplicate or redistribute in any form.



PremierInvestor.net Newsletter                 Tuesday 10-16-2001
                                                   section 2 of 2
Copyright © 2001, All rights reserved.
Redistribution in any form is strictly prohibited.

The entire newsletter is best viewed in COURIER 10 for alignment
=================================================================
To view this email newsletter in HTML format with imbedded
charts and graphs, click here:
http://www.PremierInvestor.net/htmlemail/9664_2.asp
=================================================================

In section two:

Split Trader
  Play Updates: THC

Net Bulls
  New Plays: AMAT, CSCO, QCOM

Stock Bottom / Active Trader
  Bullish Play Updates: AXP, BMET, MO, SZA
  Bearish Play Updates: LTR, STI, SYY, WPI

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: 61.39 change: -0.81 stop: 57.00

THC is still looking strong.  We were a little concerned on Friday
as the stock failed to do much after the negative trading in
Thursday's session.  Monday was another story as shares rallied
strongly off $59 level and set a new 52-week high adding 2.5% on
the day.  The same day the S&P Healthcare index rallied through
overhead resistance at its 200-dma and also closed near its highs.
We would have preferred to see stronger volume for THC's Monday
move but we're not complaining.  Patient traders who have been
waiting for THC to close above the 61.50 level received their
confirmation yesterday.  Today's dip and bounce to $61 looks like
another entry point to go long.  At this time we are going to 
continue to keep our stop at $57 but we would see more conservative
traders inching theirs up to just under $59.  The healthcare sector
is likely to benefit in any extended round of profit-taking in
the broader markets due to its appearance as a defensive play.
FYI, the HCX dipped back to 824, which had been previous resistance
only to bounce later in the day.  

Picked on October 4th @ $ 60.22
Gain since picked:       + 1.17
Earnings Date:            10/03 (confirmed)





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

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

  --------------------
  New Bullish Plays
  --------------------

Applied Materials Inc - AMAT - close: 34.45 change: +0.81 stop: 32.45

Company Description:
Applied Materials, the largest supplier of products and services 
to the global semiconductor industry, is one of the world's 
leading information infrastructure providers. Applied Materials 
enables Information for Everyone(TM) by helping semiconductor 
manufacturers produce more powerful, portable and affordable 
chips.  (source: company press release)

Why We Like It:
You've probably heard that 80% of a stock's movement is market
or sector related.  If you've never believed that look at a chart
of AMAT and then look at a chart of the Semiconductor Index (SOX).
They appear identical, especially in recent weeks.  No one truly
knows how investors will react to Intel's earnings report tonight
as after-hours action can be erratic and misleading.  However,
given the bullish sentiment in the markets and the fact that
almost everyone has already written off the 3Q earnings season
we could see increased buying interest as investors breath a
sigh of relief that Intel's numbers were not worse.  Shares of
AMAT have been producing a steady trend higher with plenty of
opportunities for traders to buy at support and sell at resistance.
Experienced traders love stocks like this as you learn to time
your entries and exits.  AMAT was discussed in tonight's market
wrap by Mr. Bailey and we encourage to read his comments if you
have not already.  He feels that AMAT could trade to 38.83 in
the short-term which is very close to its 50-dma (38.68).  
Additionally, the stock might make it to $43 once through price
resistance at $40 given an extended rally in tech issues.  This
certainly seems possible as the point-and-figure bullish price
objective is actually $46.00.  We like it because the last couple
of days have put in a bottom at 32.75 which will allow for a 
tight stop setting up a strong risk/reward scenario.  In the
wrap, Mr. Bailey suggests a stop of 32.75.  For the newsletter
we're going to use 32.45.  This will allow for a little more
volatility on Wednesday's open as the bulls and bears try to
sort out who's in control.  Fortunately, Tuesday's close was
very bullish with the stock ending at its high for the day.
Either stop should work fine.  

Picked on October 16th at $34.45
Gain since picked:         +0.00
Earnings Date              11/13 (not confirmed)




---


Cisco Systems - CSCO - close: 16.97 change: +0.76 stop: 15.85

Company Description:
By focusing on customer satisfaction and technology innovation, 
Cisco Systems, Inc. has become the worldwide leader in networking 
for the Internet. The information included below provides an 
insight into Cisco's strategy, vision, values, and recent events.
(source: company website)

Why We Like It:
The 800 lb. gorilla in the networking industry, Cisco Systems
has been a staple tech holding in millions of investor portfolios.
Thus, when the one stock many investors refused to believe could
topple finally fell it really brought the bear market home to
the investing public.  Two weeks ago, shares of CSCO took off
after positive comments from management sparked a short-covering
rally of "epic proportions" (with my apologies to Mr. Bailey 
for stealing his terminology).  Truth be told, CSCO's rally probably
had a lot to do with the Nasdaq's impressive surge these last
two weeks.  Since then we've seen many tech stocks more than double
as tech shorts across the board ran for cover.  Like many investors
and traders we've had our eye on CSCO since October 3rd as we
looked to see if the stock would hold its gains.  After about a
week of trading sideways and we saw it build a bullish coil under
resistance at $15.  Last week it broke out above that level and
has now come back to find investors buying the dip and setting
new support at $16.  The bullish trend today was fueled by 
CSCO comments that the company expects to see double-digit growth
in Eastern Europe, Africa and the Middle East next year.  The
networking giant isn't expected to announce earnings until November
5th so we have plenty of time for traders to rotate into the stock
for any potential pre-earnings run up.  On a trading basis we
like the stock here and any dip to $16.  We considered setting
our stop at $15.50 because the 50-dma is 15.77 and the 10-dma 
is at 15.47.  However, given the recent trends we would rather
be stopped out at 15.85 and re-evaluate a new entry later.  Looking
at the point-and-figure chart it shows the bearish resistance
line at 17.50.  Once over this level the stock could really move.
Of course on a regular daily chart we see price resistance at $18
and again at $20.  Longer-term traders should be watching the 200-dma
at 21.52 and longer-term bulls can take hope in a bullish price 
objective of $30 from the p-n-f chart.  On a trading basis we'd be 
happy with a move to $20 and re-evaluate from there.

Picked on October 16th at $16.97
Gain since picked:         +0.00
Earnings Date              11/05 (not confirmed)




---

QUALCOMM Inc - QCOM - close: 49.85 change: -0.70 stop: 47.00

Company Description:
QUALCOMM Incorporated is a leader in developing and delivering 
innovative digital wireless communications products and services 
based on the Company's CDMA digital technology. The Company's 
business areas include CDMA chipsets and system software; 
technology licensing; the Binary Runtime Environment for 
Wireless(TM) (BREW(TM)) applications platform; Eudora® e-mail 
software; digital cinema systems; and satellite-based systems 
including portions of the Globalstar(TM) system and wireless 
fleet management systems, OmniTRACS® and OmniExpress(TM). 
(source: company press release)

Why We Like It:
Shares of QCOM gapped up last Thursday in what appeared to be
a positive reaction to comments from JP Morgan and an upgrade
from "long-term buy" to a "buy".  The last four days have shown
that the stock has been able to hold these gains and recent
trading has the stock poised to breakout over current resistance.
The $50 level has been tough resistance for QCOM since mid-
September.  Now that investors are in a tech buying mood we
should be able to catch QCOM's next move up.  This morning 
Salomon Smith Barney actually cut their earnings estimates 
based on expected CDMA growth but reiterated their buy rating
and their target of $70 for the stock.  They are not the only 
ones who believe QCOM can make it to the high 60s and with the
late day up tick in today's trading we want to ready for the
next move.  The stock should see price resistance at $55 bolstered
by the 50-dma at 54.88.  Given QCOM's history of strong moves
we would not expect this level to be a serious threat but 
the point-and-figure chart also shows the descending line of
bearish resistance at $56.  This will be our short-term target.
Our gut tells us that the stock should be able to get to $60
but that's not going to stop us from taking some profits off
the table if it hits $55.  If we were feeling cautious on this
play we'd probably put our stop below today's low at 48.25.
However, if we're going to try and ride this stock into its
earnings report in early November it may need more room.  Thus
the newsletter will start the play with a stop at $47 which 
is just under Friday's low.

Picked on October 16th at $49.85
Gain since picked:         +0.00
Earnings Date              11/06 (confirmed)






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

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

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

American Express - AXP - close: 31.30 change: +0.41 stop: 28.60

We expected AXP to start a comeback this week and play a little
catch up with the rest of the Dow and it appears the move has
begun.  Monday's trading was perfect for traders as the stock 
gave us a little dip to 29.50 before taking off and trading as
high as 31.75 late Monday afternoon.  The stock dipped by the
close but the breakout over $30 was completed.  Tuesday's trading
merely confirms the upside breakout which should attract more
bulls.  In the news you may have read about the recent federal 
ruling that could be a major boon for AXP.  Last week a federal
court required (that's the key word here) Visa USA and MasterCard
to allow their member banks to offer rival credit cards.  Not only
is this great for AXP and it's American Express card but it should
also help Morgan Stanley's Discover card.  Both companies could 
see greatly increase revenues but the real winner may be the
consumer.  The increase in competition is likely to drive down
fees and who couldn't use lower fees?  Back to the stock... we did
consider moving our stop higher to 29.45 which would have been
just under Friday's low.  However, we chose to leave our stop at
28.60 even though one should expect the $30 to now act as strong
support.  If you feel inclined to raise your stop, do so.  

Picked on October 12th at $29.99
Gain since picked:         +1.31
Earnings Date              10/22 (not confirmed)




---

Biomet Inc - BMET - close: 32.13 change: +0.64 stop: 29.50 *new*

Our play-of-the-day for Tuesday did not disappoint and added
over 2% by the close.  As you may have read, the S&P Healthcare
index produced a strong rally on Monday to breakout above the
200-dma and price resistance near 824.  This helped propel a
number of healthcare and biotech stocks higher yesterday with
BMET being one of them.  For days now we've discussed that 
patient investors could wait for the stock to close above temporary
resistance at 31.50 to confirm the new move up.  This would have
been a safe move to wait as the sector had been trading sideways
for most of October (as had BMET).  Monday got as close to that 
trigger as possible by closing at 31.49.  It seems the bulls 
were watching as the stock gapped up today, traded to 32.55
and then dipped to 31.55 before bouncing higher.  Investors should
not be surprised by the intraday bounce as many times previous
resistance (31.50) becomes new support.  The point-and-figure
chart for BMET looks very strong and it plus a daily candlestick
chart show next major resistance at $34.  Obviously, the dip on
Friday has been the best entry point so far but we do like BMET
here as well.  The stock could be setting up for a longer-term
bull leg up and we don't want to be stopped out too soon.  Thus
we are going to nudge our stop up to 29.50.  More cautious 
investors could put it closer to $30 or even under 31.50 but 
you'll risk getting stopped out in an intraday swing.  If you're
looking for a new bullish play, this may be it.  The sector traded
higher but saw some profit taking before bouncing at previous
resistance to close only marginally higher.  BMET definitely 
out performed the group today and has had almost two weeks to digest
its late September gains.

Picked on October 2nd at $30.35
Gain since picked:        +1.78
Earnings Date             09/20 (confirmed)




---

Phillip Morris - MO - close: 50.69 change: +0.21 stop: 49.70 *new* 

Volume has been very light the two days ahead of MO's earnings
report.  The company is expected to announce before the market
tomorrow morning.  Current estimates are for $1.07 a share.  If
we extrapolate from Kraft's earnings report today (NYSE: KFT),
who is still majority owned by MO, then Phillip Morris could 
hit their estimates despite a small decrease in revenues.  Granted 
this is pure speculation and they very well could beat the numbers 
on all fronts.  We hope that whatever the company turns in tomorrow
will get the stock moving again one way or the other.  The last
three days has seen nothing but churning between $50 and $51
as investors wait for the report.  We're going to inch our stop
up to 49.70 from 49.25.  If shareholders decide to sell then we
want out quickly.  The risk is that the stock sees some volatility,
we get stopped out and then it trades higher from there.  There
is also a risk the stock gaps below our stop but considering MO's
history we don't feel the odds are very high of a gap.

Picked on August 30th at $47.94
Gain since picked:        +2.75
Earnings Date             10/17 (confirmed)




---

Suiza Foods - SZA - close: 58.60 change: +0.19 stop: 57.90 *new*

If you thought going long at 59.43 with a stop at 57.50 was a 
good entry then jumping in at 58.60 should look great.  Our 
defensive food play slipped on us this Monday as techs took the
spotlight again.  SZA rallied higher early this morning but 
again it looks like investors ignored it to focus on other
sectors.  Why play a defensive stock when techs stocks are all
in rally mode?  Good question.  We're interested in SZA because
like every stock/sector/market, it moves in cycles.  The stock
has sold off to its 50-dma and this is the third day it has
been trading above this support.  If it wasn't for today's spike
this morning we'd probably be a bit more concerned that the
chart was showing lower highs.  To be honest, it wouldn't hurt
to wait for the turnaround to begin before initiating a position.
However, to make the risk/reward scenario even better we're 
going to slide our stop right up to 57.90.  The last three days
have seen the low at or near 58.40 and this will allow for a
50 cent leeway.  SZA will probably see interest the first significant
down day in the broader markets.  Until then be patient.

Picked on October 12th at $59.43
Gain since picked:         -0.83
Earnings Date              11/07 (confirmed)





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

Loews Corp - LTR - close: 47.91 change: +0.41 stop: 48.50 *new*

We hope bearish traders read the full play write up over the
weekend as LTR has not been performing to expectations.  Our
comments were to look for a possible failed rally at $47 if
the stock surprises us and trades higher on Monday.  The stock
did trade higher on Monday - right up to $48 with late day
support at 47.40.  Today wasn't much better for bearish traders
as the stock produced a small dip at the open and then continued
to trade sideways before spiking up towards the close.  There
is still significant price resistance at $50 and the 50-dma at
$49 overhead but our outlook on this play has soured.  A breakout
above $50 would be very bullish and probably send many shorts
covering.  The high last week was 48.45.  We're going to lower
our stop to 48.50 and frankly, if we were short this stock and
it traded over 48.15 we'd cover.  The volume has been very 
strong the last two days which should be a clue that the bounce
has some strength to it.  We would just close the play here and
cut our losses but we want to give it another day to potentially
rollover if the market dips tomorrow.  We would not recommend
any new bearish positions at this time.

Picked on October 12th at $46.01
Gain since picked:         -1.90
Earnings Date               N/A  (not confirmed)




---

Sysco Corp - SYY - close: 24.80 change: -0.05 stop: 25.50 *new*

Slipping slowly profitable, this bearish play on SYY is up
over a point so far but the real test will be tomorrow.  The
bears have noticed the new pattern emerging of lower highs and
lower lows with today's small dip on higher volume.  The
MACD is about to confirm a bearish crossover and everything
appears to be going as planned.  Except for one thing.  This
afternoon SYY's earnings date was confirmed as tomorrow, 
October 17th - not as previously expected on Thursday, October
18th.  With the report expected tomorrow before the bell we
could see the play stopped out or see the next bear leg down
accelerated.  In anticipation of the report we are lowering our
stop to 25.50, which is 20 cents above today's high.  Given
a longer time frame we would have probably picked 25.75 as
a stop which is the 200-hour MA.  The risk is the stock gaps
above our stop but given the expectation that earnings will
be more disappointing than expected bearish traders might be
okay.  

Picked on October 5th at $26.12
Gain since picked:        +1.32
Earnings Date             10/17 (confirmed)




---

Suntrust Banks - STI - close: 60.19 change: +0.62 stop: 62.25

As we discussed on Friday, the battle for STI is still underway.
In the last year the stock has slipped below support at $60 
more than once and each time a battle ensued between the
bears and the bulls with the bulls pulling it away every time.
Monday's trading would have given hope to the bears as the stock
dipped to 58.21 but by afternoon shares had recovered to close
only marginally lowered.  Tuesday saw shares of STI rally near 
the open and rightly so as many financial stocks produced strong
gains today.  Fortunately for the bears STI was unable to 
maintain much of a gain but did close back over $60.  STI's 
under performance of the rest of its industry continues to 
strengthen our bias that the stock will weaken but our comments
on Friday suggested traders only consider it a play if the
price remains under $60.  We would not initiate any new positions
until the stock slips back under $60 and cautious bears may
want to see the stock close under $59 to confirm the new
trend.  Keep an eye on the MACD as the histogram appears to
be showing a bullish divergence.  This should set off caution
flags for bearish traders.  

Picked on October 12th at $59.85
Gain since picked:         -0.34
Earnings Date              10/10 (confirmed)





---

Watson Pharmaceuticals - WPI - cls: 51.55 chg: +0.15 stop: 53.60 *new*

WPI gapped lower on Monday after news of a court ruling between
Bristol-Meyers Squibb (BMY) and Mylan Laboratories (MYL).  Last
March both WPI and MYL had been marketing generic versions of
BMY's BuSpar drug after a U.S. District Court gave them a 
favorable ruling against a BMY patent case.  These last several
months have seen BMY's sales of BuSpar evaporate in favor of
the cheaper generic versions.  This Monday news was released
that BMY's appeal had been approved and the company could force
WPI and MYL to pull their copy-cat drugs off the market.  
Obviously a painful loss for WPI and MYL later news stories 
expressed the opinion that BMY may not force the generics out
of the market as the court case is still on going and consumer
outcry may be an issue.  We had anticipated that $50 may be
support for WPI but our short-term target remains $48.  The 
stock attempted to fill the gap from Monday's drop and almost
succeeded before selling sent shares lower this afternoon.
The MACD has confirmed a bearish crossover and we've chosen
to lower our stop to 53.60.  

Picked on October 12th at $52.60
Gain since picked:         +1.05
Earnings Date              08/14 (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 

NVR     NVR Inc                   163.91     +3.54
TNL     Technitrol Inc             25.25     +1.58
MDCO    The Medicines Co            7.19     +1.26
PHSY    Pacificare                 15.00     +1.00
CNCT    Connectics Corp             8.50     +0.71
GOSHA   Oshkosh B'gosh Inc         29.10     +1.49

--------------------------------------- 
Breakout to Upside (Stocks $5 to $20) 
--------------------------------------- 
Ticker  Company Name               Close     Change 

ACTT    Act Teleconferencing Inc    9.42     +1.42
ALA     Alcatel                    13.68     +1.13
SONS    Sonus Networks Inc          5.02     +1.03
VICR    Vicor Corp                 15.31     +1.26
OSIS    Osi Systems                14.09     +3.59

--------------------------------------- 
Breakout to Upside (Stocks over $20) 
--------------------------------------- 
Ticker  Company Name               Close     Change 

ONE     Bank One Corp              32.81     +2.46
JNPR    Juniper Networks           22.95     +2.43
DIGE    Digene Corp                36.88     +2.51
HDI     Harley-Davidson            49.86     +1.02
ROP     Roper Industries           40.75     +1.55

----------------------------------------- 
Breakout to Downside (Stocks over $20) 
------------------------------------------- 
Ticker  Company Name               Close     Change 

ASW     A.C.L.N. Limited           33.31     -2.90
AMSG    Amsurg Corp                24.51     -1.25
FLM     Fleming Companies          23.95     -1.12
FRX     Forest Laboratories        74.67     -5.61
RTRSY   Reuters Group              53.60     -5.02

------------------------------------------------------------ 
Recently Overbought With Bearish Signals (Stocks over $20) 
------------------------------------------------------------- 
Ticker  Company Name               Close     Change 

S       Sears                      38.17     -0.77
PNP     Pan Pacific Retail         27.20     -0.67
MTX     Minerals Technologies      37.80     -1.06
CGNX    Cognex Corp                20.84     -1.66



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