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Daily Newsletter, Tuesday, 10/23/2001

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PremierInvestor.net Newsletter                 Tuesday 10-23-2001
                                                   section 1 of 2
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In section one:

Market Wrap: I found my Halloween costume!
Market Sentiment: Two steps forward and one-step back. 
Play-of-the-Day:  Are Drugs Risky?

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U.S. Market Numbers
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MARKET WRAP  (view in courier font for table alignment)
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      10-23-2001          High     Low     Volume Advance/Decline
DJIA     9340.08 - 36.95  9439.21  9300.37 1.31 bln   1522/1591
NASDAQ   1704.44 -  3.64  1739.47  1695.22 1.82 bln   1679/1913
S&P 100   559.05 -  3.47   566.89   557.02   Totals   3201/3504
S&P 500  1084.78 -  5.12  1098.99  1081.53             
RUS 2000  427.37 -  3.13   431.99   427.35
DJ TRANS 2261.99 + 58.41  2289.20  2202.85
VIX        33.19 +  0.08    33.82    32.25 
VXN        63.73 -  3.63    67.03    63.18
TRIN        1.19 
Put/Call    0.50
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===========
Market Wrap
===========

I found my Halloween costume!

I've been struggling for days trying to figure out "what I want 
to be" for Halloween.  Look no further than last night's Market 
Wrap on PremierInvestor.net that for me to now know what to dress 
like on Halloween.  To find the answer, please read on.

I'm not one for giving pep talks, but every so often I get down 
on myself.  It's day's like today where It's best to step back, 
take a look and things and make sure I'm on the right track.  I 
would have "pounded my fist on the table" regarding today's "Play 
of the Day" on PremierInvestor.net that this stock would have 
gone up 5%!  Instead, the market, sector and stock wanted to make 
sure I kept both feet on the ground.

So what went wrong?  Did anything go wrong?  Am I on the right 
side of things?  Was today just "one of those days?  Let's take a 
look at the play list and see if we've got our head in the sand 
and possibly missed something.  After all, I used many of the 
same tools and techniques in picking this morning's "Play of the 
Day" that we've been using on other stocks.

PremierInvestor.net Play list (hypothetical $5,000 investment)





I've taken the PremierInvestor.net play list and "plugged it 
into" our portfolio tracker.  I'd suggest that every 
trader/investor try and view their portfolio the same way.  I've 
put our BULLISH plays on top and subtotaled them.  I've then 
taken our BEARISH plays and put them at the bottom and subtotaled 
them.  The two combined equal "the account" and that's the number 
we're most concerned about.  How is the account doing.  What are 
the strengths/weaknesses of the portfolio? Note:  Our profiled 
short in shares of Sysco Corp. (NYSE:SYY) was stopped out for a 
gain today!  Raise some cash and get ready for the next one!

Well, at the end of the day, there's one obvious weakness.  
Protein Design Labs (NASDAQ:PDLI).  What went wrong?  I must 
immediately review everything I talked about last night in the 
wrap and see if something has changed, or if I missed anything.

I'm not going to go into great detail here, but I found just one 
thing I missed and we need to keep our stop firm on PDLI at 
$26.50.  While my "error" was in no way the major reason for 
being bullish shares of PDLI, I made a stupid mistake.

Here are some statements I've made recently for being bullish 
biotechs.  One..."they're stronger on a relative strength basis 
than the semiconductors."  Did this hold true today?  Yes.  The 
Semiconductor Index (SOX.X) was down 1.02% and the Biotech Index 
(BTK.X) was down 0.75%.  Today, the biotechs traded stronger than 
the semiconductors and gained some strength RELATIVE to the 
semiconductors.

Aha!  Here's a mistake!  In last night's wrap, I compared one of 
our bullish plays in Biomet (NASDAQ:BMET) to Protein Design Labs 
(NASDAQ:PDLI).  My mistake here is that Biomet (BMET) is 
classified as HEALTHCARE and not Biotech!  Today, Biomet (BMET) 
fell 1.53%, while Protein Design Labs (PDLI) fell 5.39%!  I 
stress so often that SECTOR analysis is so important.  I raise my 
hand here and admit a mistake.  I assumed a stock that had the 
name BIOmet was BIOtechnolgy related.  You know what they say 
about "assuming" anything.  In this case, I'm the one looking a 
bit like a donkey at this point.  I think I've found my Halloween 
costume.

No wonder the bar chart of Biomet (BMET) looked different than 
the chart of PDLI and the Biotechnology Index (BTK.X).  When I 
was comparing the chart of BMET last night to that of the 
Biotechnology Index (BTK.X) I wondered to myself why BMET's 
anchor point for the top of retracement was in late July and not 
in early June like the BTK.X.

I also classified Gilead Sciences (NASDAQ:GILD) as a biotech.  
This classification was correct.  Today, Gilead Sciences traded 
lower by 2.27%, but was not able to reach another 52- week high.  
At the end of last night's Market Wrap, we quickly discussed the 
strength of this stock and now's a good time to review its chart.  
This stock will most likely give us some future insight into how 
our PDLI trade plays out.  

Gilead Sciences (GILD) Chart -





I will have to "roll up" retracement on shares of Gilead Sciences 
(NASDAQ:GILD), but I wanted to show you what retracement looked 
like when anchored to many of the same relative lows and relative 
highs that we anchored our retracement brackets from on the 
Biotech Index (BTK.X) and Protein Design Labs (PDLI).  The anchor 
points from the late March lows, to late June highs define the 
"range."  I'm using Gilead (GILD) as one of my sector leaders.  I 
didn't want to profile it as a bullish play list this morning as 
I felt this stock might be subject to profit taking.  Even if the 
Biotech Index (BTK.X) had gained 5% today, I thought the 
technicals on GILD might still have the stock suspect to pulling 
back.  

Note something on the above chart that I feel is very important.  
Notice how shares of GILD traded "sloppy" below the 38.2% 
retracement bracket ($48.55) when it violated that level four or 
five different times.  You see, NOBODY is trading that 
retracement bracket.  NOBODY!  I eventually "figure out" what 
levels the MARKET is trading, but we have to go back in time.  
Until I figure out what levels the MARKET is trading on a going 
forward basis, I want to stay on the sidelines regarding GILD and 
get some more trading days behind us.

Here's the retracement levels that the MARKET sure looks to be 
trading as it relates to GILD.

Gilead Sciences (GILD) - Weekly interval




Key levels for GILD have been the $24.68 level and the $46 level.  
I say "key" as this is where GILD found its bottom on 01/08/01 
(somebody very smart bought at that point).  Notice how the 
$37.81 level acted like resistance on a rally from the January 
lows, but once broken to the upside, GILD shot higher, found 
support near $46 before pushing higher still to 0% retracement of 
$59.  Every pullback to the $46 level was bought and bought with 
some conviction (somebody has been buying again)!  I now need to 
"roll up retracement" with the $46 level playing some type of 
important role in the technicals.

It's tough to keep retracement anchored at $24.68.  If I do that, 
then I'll have too wide of a range between levels and can't 
manage my risk very well.  Do I really want to buy at $59.06 and 
take potential downside heat to $52.50?  Not me.

Gilead Sciences - rolled up retracement




Since we determined that $46 looked to be a closely watched 
level, I'm anchoring my retracement bracket there.  I like the 
way the stock seems to have found a "pivot" point at $60 based on 
this retracement too.  Once GILD broke above the $46 level, I can 
envision a market maker saying "holy smoke, this stock is strong.  
Once the stock rallied up to $54.59 and pulled back to $46 our 
retracement bracket could have been fitted (fit from 100% to 
61.8% at $54.95) resulting in the 50% retracement level at 
$57.29, 38.2% at $60, 19.1% at $64.39 and 0% at $68.77.  
Yesterday's high was $68.70 and today's high was $68.55.  I now 
have some type of "clue" as to why the stock is having some 
trouble at that level based on our "fitted retracement."

Now what?  If you were short this stock at $65, how do you feel?  
A little worried?  Where would you cover your short?  If I were 
short at $65, I'd thank my lucky stars if the stock pulled back 
to $60-$57.29 and look to cover.  

Why do I ask that question..."If you were short at $65...."  I 
want you and I to get inside the head of a bearish trader that 
may have shorted a strong stock in a strong sector (we try to 
avoid shorting strong stocks in strong sectors, but like to short 
weak stocks in weak sectors).  Right now, I'd look to enter GILD 
on a pullback near $60 and let the MARKET try and take some of 
the downside risk out of the trade.  Then we can snug up a stop 
under the stock just below the 50% retracement level.  That will 
also give us some time to let the 50-day MA, currently at $56.75 
play catch up.

In last night's market wrap, I wanted to monitor GILD as it is a 
very strong stock in the biotech sector.  It's leadership is 
important as it relates to our bullish play in shares of PDLI.  I 
would think that the longer GILD stays above the $60 level, the 
better performance we see out of the Biotechnology Index and the 
better the probability of keeping potential sellers at bay in 
shares of PDLI.

Did you know?

The Biotechnology Index (BTK.X) is traded on the AMEX (American 
Stock Exchange).  The index is equally dollar weighted between 
these stocks (AFFX, AMGN, CRA, BGEN, CEPH, CHIR, CORR, GENZ, DNA, 
GILD, HGSI, IDPH, IMNX, MEDI, MLNM, PDLI, VRTX).

When you review all of these chart, you really see there are some 
"clear" leaders and some stocks that just seem to be benefiting 
from the recent biotech bullishness.  

To the point

Wow... probably more than you ever wished to know about 
retracement, but I love trying to figure out why stocks trade 
certain levels.  Once I get a good feel for the levels, it makes 
it "easier" to make some market judgments. 

In last night's wrap, I felt a break above the 528 level would be 
bullish for the Biotech Index (BTK.X) and therefore, other 
biotech stocks too.  This morning, the BTK.X shot higher from 
last night's close of 520.37 to $529.55 in the first hour of 
trading, but did not close above the $528 level at $515.97.  

This action now has us looking at the S&P 500 Index (SPX.X).  
Here we've still got some good news with a session close of 1,084 
and this is above our 1,082 level we have identified in the past 
as a closely watched level.  This broader market index has been 
oscillating back and forth this 1,082 level for the past two 
weeks and resistance has been firm at the 50-day moving average.

S&P 500 Index Chart 




At this point, our portfolio is weighted 5 bullish and 2 bearish 
(our bearish play in SYY was stopped out with a gain today) so 
right now I need to be getting another bearish candidate or two 
lined up, just in case that darned 50-day MA is where all the 
bears are applying leverage from.  At this point, I want to see 
the S&P 500 get above that 50-day moving average on a closing 
basis of 1,100.  It had a chance to do so on October 17th and 
then again today.  So far the bulls have been unable to get a 
move going above that level.  

Until I see a move above the 50-day moving average, I want to get 
our portfolio to a "hedged" position so our account doesn't get 
hit should we get some type of unexpected move lower.  A 
subscriber holding all of the above positions would have an 
account balance that is up 1.4%.  That will change tomorrow 
morning when the Sysco Corp. (NYSE:SYY) position is removed.  
Those gains are booked and will not be reflected from here on 
out.

Symantec Corporation (SYMC) -




Today's 4% gain in our profiled bullish play of Symantec 
(NASDAQ:SYMC) helped offset today's downside from PDLI.  If the 
SPX can break above its 50-day MA, then I think that shares of 
Symantec should be able to plow through that 61.8% retracement 
level at $57.41.  We're raising our stop from $49 to $52 to try 
and remove some risk from this bullish play.

In a nutshell, the quicker the bulls can push the S&P 500 above 
that 50-day moving average, the more bullish I would get.  Until 
then, keep your stops in place and look to trade bullish in 
strong stocks in strong sectors and short weak stocks in weak 
sector.  Use your relative strength charts to help determine 
which is which!

Jeff Bailey
Senior Market Technician


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

Two steps forward and one-step back. 
by Russ Moore

Investors decided to take some profits following two positive 
sessions. Once again it was the “ANTHRAX” news that turned the 
tables on Wall Street and unlike yesterday, the markets were 
unable to shrug off today’s report.

The DOW ended the session with a modest loss of -0.4 percent 
while the NASDAQ shed -0.2 percent. The big cap NDX bucked the 
trend and finished in the green with a fractional gain of +0.06 
percent.

Volume moved up with 1.30 billion shares changing hands on the 
NYSE and 1.81 billion shares moving on the NASDAQ. Market breadth 
was mixed, as winners edged losers by a 16/15 margin on the big 
board, while losers outpaced winners by a 19/16 margin on the 
tech side.

The broader markets saw weakness in healthcare, oil, drug, 
biotech, consumer, natural gas and utility sectors. Most tech 
sectors enjoyed flat, to minimal gains with the chip, and 
computer sectors, the notable exceptions. 

Today’s markets were void of economic data. Wednesday will see 
the Fed’s Beige book report on economic conditions. The big 
reports will come out on Thursday and Friday, beginning with 
initial jobless claims, durable goods orders, and existing home 
sales, and ending with new home sales, and the Michigan Sentiment 
report. In combination, these reports are capable of causing a 
significant market move in either direction.

Sentiment remains slanted to the bullish side with a growing 
number of investors joining the “we’ve turned the corner” club. 
Fear is subsiding on the market front, but increasing over the 
Anthrax situation. I still believe investors are ready to push 
the markets higher, and will do so over the short-term, provided 
a major news story doesn’t veto the rally. 


VIX 
Tuesday 10/23 close: 33.19


VXN
Tuesday 10/23 close: 63.73


30-yr Bonds
Tuesday 10/23 close: 5.39


Total Put/Call Ratio: .58


Equity Option Put/Call Ratio: .50


Index Option Put/Call Ratio:  1.46


===

NASDAQ 100 Index (NDX/QQQ)
52-Week High: 103.51
52-Week Low:   28.19
Current close: 34.63

Volume/Open Interest
Maximum calls: 35/45,998
Maximum puts : 32/50,251

Moving Averages
 10 DMA 33
 20 DMA 32
 50 DMA 34
200 DMA 44

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: 559.05

Volume/Open Interest
Maximum calls: 560/4,865
Maximum puts : 480/6,937

Moving Averages
 10 DMA  558
 20 DMA  548
 50 DMA  563
200 DMA  623

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: 1084.78

Volume / Open Interest
Maximum calls: 1100/15,175
Maximum puts :  950/21,532

Moving Averages
 10 DMA 1085
 20 DMA 1067
 50 DMA 1099
200 DMA 1208

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:  9,340.08

Volume / Open Interest
Maximum Calls: 94/22,211
Maximum Puts   92/22,893

Moving Averages:
 10 DMA  9,304
 20 DMA  9,117
 50 DMA  9,533
200 DMA 10,307

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: 515.63

Volume / Open Interest
Maximum Calls: 520/  152
Maximum Puts:  460/1,607 

Moving Averages
 10 DMA 499
 20 DMA 477
 50 DMA 489
200 DMA 539

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: 443.09

Volume / Open Interest
Maximum Calls: 570/ 503
Maximum Puts:  400/ 767

Moving Averages
 10 DMA 445
 20 DMA 415
 50 DMA 483
200 DMA 585

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: 396.00

Volume / Open Interest
Maximum Calls: 400/ 204
Maximum Puts:  400/1002

Moving Averages
 10 DMA 396
 20 DMA 393
 50 DMA 389
200 DMA 394

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 10/19
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 
10/02/01     365,200   408,567   (43,367)   (11.7%)
10/09/01     369,049   407,804   (38,755)   (10.6%)
10/16/01     378,866   415,289   (36,423)   ( 6.0%
 
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
10/02/01       124,249    73,882    50,367    (1.1%)
10/09/01       122,292    74,539    47,753    (5.2%)
10/16/01       124,568    73,779    50,789     6.3%
  
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 
10/02/01      26,703    37,699   (10,996)    9.4%
10/09/01      24,662    38,020   (13,358)   21.5%
10/16/01      27,398    40,397   (12,999)   (2.7%)

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
10/02/01       10,918     6,804    4,114      (0.1%)
10/09/01       11,948     7,012    4,936      20.0%
10/16/01       12,901     6,893    6,008      21.7%

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 
10/02/01      22,755    10,124   12,631      3.5%
10/09/01      24,873    10,194   14,679     16.2%
10/19/01      25,402    10,267   15,135      3.1%

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
10/02/01       4,731    11,868    (7,137)    (12.1%)
10/09/01       3,517    12,294    (8,777)     23.0%
10/16/01       4,514    12,104    (7,590)    (13.5%)
 
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        +50,789     +47,753        -36,423     -38,755

Total Open
Interest %       (+25.61%)  (+24.26%)     (-4.59%)   (-4.99%)
                 net-long   net-long      net-short  net-short


                     Small Specs             Commercials
DJIA futures     (Current) (Previous)    (Current) (Previous)
Open Interest
Net Value          -7,590     -8,777          +15,135    14,679
Total Open
interest %       (-45.67%)    (-55.51%)      (+42.43%)  (+41.86%)
                 net-short   net-short     net-long    net-long


                     Small Spec              Commercials
NASDAQ 100      (Current) (Previous)    (Current) (Previous)
Open Interest
Net Value         +6008      +4936         -12,999    -13,358

Total Open
Interest %        (+30.35%)   (+26.03%)     (-19.17%) (-21.31%)
                 net-long   net-long      net-short net-short


What COT Data Tells Us
----------------------
Indices:.Action was virtually flat across all major indices with 
no significant position shift taking place.

Gold:.Commercials remain on the short-side with a modest 
reduction in their net-short position.

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
10/16 51,816 contracts net-short

Data compiled as of Tuesday 10/16 by the CFTC.



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

Bristol Myers Squibb - BMY - close: 58.02 change: -1.68 stop: 60.25

Company Description
As an $18 billion pharmaceutical company, BMY has become the 
fifth-largest drugmaker in the world.  Having a large stable of 
profitable brand name drugs and a new focus on divesting lower-
margin business for higher-margin drugs should keep them as a 
growing powerhouse in the industry.

Why We Like It:
With a company description like that and the recent earnings 
report there are probably a number of you that think we'd have to 
be crazy to want to short BMY.  Earnings were predictably 
positive and the other two major drug companies who announced 
similar results last week (PFE and JNJ) have rallied on their 
announcements.  Why should BMY be different?  Truthfully, that is 
an excellent question.  We would have a hard time claiming BMY is 
a long-term bearish play.  Big-cap drug companies are known for 
being strong steady earnings producers and in times of 
uncertainty both big and small investors seek them out as safe 
havens.  Looking at the recent earnings news the company reported 
a 9 percent gain in profits on strong results from key drug 
sales.  On top of the positive numbers, management says they will 
divest themselves of lower-margin businesses like their Clairol 
beauty line and refocus on drug operations like their newly 
acquired DuPont pharmaceuticals company.  

So what's not to like?  Hard-nosed bears could claim that BMY may 
suffer from key drugs losing patent protection which in turn will 
make sales susceptible to cheaper generic drugs.  BMY has already 
seen that happen with their BuSpar drug just this year.  Yet the 
company is focusing more on the their drug divisions and willing 
to make appropriate acquisitions and ingeniously reengineered one 
brand name drug, Glucophage, so that the company will keep its 
patent protection on the new improved versions.  So again we ask 
ourselves, what's not to like?  Honestly, we see BMY as a 
potential victim to a couple of issues.  One, the market still 
maintains a bullish bias.  It may be a fragile bullish bias but 
the trend is still up in both the Nasdaq and the Dow.  As the 
broader market continues to advance money should rotate out of 
defensive sectors like drugs and BMY will under perform the 
market.  Now that the company has reported earnings we may see 
more of a "sell the news" affect as traders rotate into other 
stocks that may have more impressive results or more impressive 
guidance going forward.  Two, technically the stock is running 
out of steam.  BMY has not been able to close over the $60 since 
mid-March.  It's barely been able to even trade above the $60 and 
that was in late March.  After struggling to break above this 
level for the last week or more shares collapsed today back under 
the 200-dma (58.12).  We realize that this is only a few cents 
away but the message is pretty discouraging for the bulls.  
Consider that our pivot point of $60 is only a couple of points 
away and the stock is actually showing a bearish price objective 
of $41 we feel this is a low risk/high reward scenario.  
Obviously it won't be trading at $41 anytime soon but our short-
term downside targets are $55 and $51.  

How do you trade BMY?  We would look at BMY for two distinct 
entry points to go short.  The first and most likely is shares 
trade to 57.75 or close under $58.00 (depending on your activity 
level).  The second entry could unfold with BMY bouncing back to 
$60 if the broader market dips only to have the stock rollover 
under this resistance again.  The second entry provides the best 
risk reward because you don't initiate a play if BMY trades above 
$60.  On the contrary, we would actually consider a long play 
under the circumstances.  However, if it fails to trade above $60 
on any bounce or if it closes under $58 (trades under 57.75 
intraday) we would start a short position.  We're going to start 
our play with a stop at $60.25 but traders need to keep an eye on 
the Dow Jones and the Drug index (DRG.X).

Picked on October 23rd at $58.02
Gain since picked:         +0.00
Earnings Date              10/23 (confirmed)







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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.

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Do not duplicate or redistribute in any form.



PremierInvestor.net Newsletter                 Tuesday 10-23-2001
                                                   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
  Play Updates: THC

Net Bulls
  New Plays: ALTR (bearish)
  Bullish Play Updates: PDLI, SYMC

Stock Bottom / Active Trader
  New Plays: BMY (bearish)
  Bullish Play Updates: BMET, CBRL
  Bearish Play Updates: FNM, STI
  Closed Bearish Plays: SYY

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: 60.80 change: -1.43 stop: 57.60 

Healthcare bulls seem to be stuck in first gear.  Every time they
move into second gear the sector stalls and we don't get anywhere.
If you don't like that analogy, just look at a chart of the HCX.
Every time the sector starts to move the next day the bulls seem
to give it all back.  We know that healthcare stocks are supposed
to be seen as defensive.  In a backhanded sort of way this may be
good for the market when healthcare and drugs don't take off like
we (as bullish traders with healthcare plays) would like them to.
There were a large number of earnings today and several drug and
healthcare companies announced their 3Q results.  Odds are the
pullbacks we saw in the HCX and the DRG were signs that traders
are "selling the news".  It was interesting how the BTK held up
better and maintained most of Monday's gains versus the HCX and DRG.
The reason we focus on the bigger picture with the sector indices
is because it's likely the only thing holding THC back.  The stock
is both technically and fundamentally strong but it can't get off
the starting blocks.  Every time the starter's gun goes off someone
cries "false start".  We continue to reiterate our comments that
traders can take their time and be patient when entering a new play
on THC.  Today's dip to $60 or another dip to $59 may be the entry
to wait for.  No change in our stop.

Picked on October 4th @ $ 60.22
Gain since picked:       + 0.58
Earnings Date:            10/03 (confirmed)






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

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

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

Altera Corp - ALTR - close: 20.20 change: +0.22 stop: 21.00

Company Description:
Altera Corporation, The Programmable Solutions Company®, was 
founded in 1983 and is a leading supplier of programmable logic 
devices (PLDs). Altera's CMOS-based PLDs are user-programmable 
semiconductor chips that enhance flexibility and reduce time-to-
market for companies in the communications, computer peripheral, 
and industrial markets. By using high performance devices, 
software development tools, and sophisticated intellectual 
property cores, system-on-a-programmable-chip (SOPC) solutions 
can be created with embedded processors, memory, and other 
complex logic together on a single PLD. 
(source: company press release)

Why We Like It:
You've heard our wrap writers and play writers say it before and 
we'll say it again.  If you're looking to go long a stock, pick a 
strong stock in a bullish sector.  If you're looking to go short 
a stock, pick a weak stock in a bearish sector.  Now you've also 
heard that we're cautiously optimistic on the market so why are 
we presenting a chip stock as a short candidate?  

We feel that as long as the S&P 500 continues to falter below its 
50-dma, which happens to be trading near 1100 then we have a 
strong potential for another downside move.  Everyone who follows 
the tech sector is keenly aware that there has been little 
improvement in the semiconductor business.  What looked like a 
potential recovery by the first part of next year has now been 
pushed back a quarter or two merely because they don't know when 
the situation will really turn around.  There is hope that IT 
spending will improve next year but it may not be significant 
enough to help the chip industry until late 2002.  I can still 
hear some voices of dissent about our heretical proposition that 
we short semis.  To be honest we discussed this trade at great 
length in the office and unfortunately it was actually the cause 
of a tardy newsletter this evening.  We eventually boiled it down 
to a simple hypothesis.  If the Nasdaq is weak and sees further 
consolidating the SOX should out perform to the downside.  If the 
chips lead the decline then a weak stock like ALTR should be a 
winning bearish play.  

If you disagree then by all means don't play ALTR short.  Another 
warning... if the futures are strongly positive tomorrow morning 
or if the Nasdaq opens with a strong rally then obviously don't 
short ALTR unless it continues to look weak.  We're going to play 
this with a pretty tight stop on it but first some fundamental 
news.

Late Monday the company posted its earnings report and the 
numbers were in line with estimates of 5 cents a share.  Not that 
it was much of a guessing game since the company had guided 
analysts to this number months beforehand.  However, the numbers 
were pretty gruesome for this Halloween season.  Net income had 
plummeted over 80 percent with the CFO reporting that gross 
margins had fallen 2 points to 61 percent.  Not surprising were 
comments from management that the fourth quarter would be worse 
with sales falling another 5 to 10 percent from this quarter's 
$174.2 million.  Brokers were quick to cut their estimates on the 
stock (big surprise) with one broker lowering his 12-month price 
target from $35 to $26 but reiterating his buy rating.

We're going to make this pretty simple to trade.  If ALTR trades 
under $20 then consider it a potential short.  Our short-term 
target is $18 even though we expect it to see some support at 
$19.  If you're happy with a 5% move then cover at $19.  We're 
going to start the play with a stop at $21, which is a dime over 
Tuesday's high.  We remind you that you need to see what the 
markets are doing before you blindly initiate a short play.  
There is a chance that we never initiate a position as shares of 
ALTR were trading up 20 cents in after hours.  If you like this 
idea but don't like to trade ALTR (some folks don't want to short 
stocks under $20) then take a look at XLNX.  XLNX is a rival chip 
company with a similar situation and similar technical pattern.

Picked on October 23rd at $20.20
Gain since picked:         +0.00
Earnings Date              10/22 (confirmed)





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

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

Protein Design Labs - PDLI - close: 29.21 change: -1.54 stop: 26.50

Once again we've written about the biotech sector and PDLI 
specifically in the wrap tonight (10/23/01).  This morning got 
off to a pretty good start with the stock trading as high as 
31.65.  Unfortunately, both PDLI and the Biotech sector (BTK) 
started to dip before 11:00 AM and the Nasdaq wasn't far behind.  
The rest of the day was nothing but frustration as the stock and 
the broader market gave into renewed Anthrax fears.  Technically 
the stock has fallen below its 200-dma which is never a good sign 
but the short-term 10-dma did hold up.  If you're looking for a 
tech stock to go long we still think PDLI is worth investigating.  
Using a regression channel tool from the 26th of October shows 
that today's low stopped just north of the bottom edge of PDLI's 
ascending channel.  Traders can buy the dip and try to catch the 
full appreciation of any move up to the top of the channel (about 
$33.50).  If you're feeling more conservative there is no reason 
to not use a tighter stop than the one we have suggested.  A stop 
just below $28 might be just the trick for a new entry at this 
level.  The biotech sector as a whole seemed to hold up better in 
today's pullback and thus demonstrates relative strength for 
whatever the market throws our way next.

Picked on October 22nd at $30.75
Gain since picked:         -1.54
Earnings Date              11/05 (not confirmed)




---

Symantec Corp. - SYMC - close: 56.44 change: +2.21 stop: 52.00 *new*

Microsoft may have posted its second positive close for the week 
but it looks like SYMC is one of the leaders in the software 
sector right now.  Even rival security software maker NETA didn't 
perform as well as SYMC did today.  We're encouraged by the 
strength we see in the GSO software index put now feel that SYMC 
looks somewhat extended and due for a pullback.  These concerns 
are strengthened when we look at a retracement tool applied to 
SYMC's chart from the mid-May high to the late-September low.  
After applying the retracement tool we see that today's high was 
just under the 61.8% retracement level or $57.41 (61.8% is a 
Fibonacci retracement level).  Don't misinterpret our comments 
here.  We're still very positive on SYMC and would expect the 
trend to continue but a pull back to $53 would not be out of 
line.  Thus we've raised our stop to $52.00 to protect our 
capital.  More nimble traders who are happy with the +4% move so 
far can consider taking gains now and look to re-enter on a 
pullback.  Continue to keep an eye on the GSO and if the sector 
trades higher it might postpone any dip in SYMC.  Consider your 
entry points carefully.

Picked on October 11th at $53.88
Gain since picked:         +2.56
Earnings Date              10/17 (confirmed)






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

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

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

Bristol Myers Squibb - BMY - close: 58.02 change: -1.68 stop: 60.25

Company Description
As an $18 billion pharmaceutical company, BMY has become the 
fifth-largest drugmaker in the world.  Having a large stable of 
profitable brand name drugs and a new focus on divesting lower-
margin business for higher-margin drugs should keep them as a 
growing powerhouse in the industry.

Why We Like It:
With a company description like that and the recent earnings 
report there are probably a number of you that think we'd have to 
be crazy to want to short BMY.  Earnings were predictably 
positive and the other two major drug companies who announced 
similar results last week (PFE and JNJ) have rallied on their 
announcements.  Why should BMY be different?  Truthfully, that is 
an excellent question.  We would have a hard time claiming BMY is 
a long-term bearish play.  Big-cap drug companies are known for 
being strong steady earnings producers and in times of 
uncertainty both big and small investors seek them out as safe 
havens.  Looking at the recent earnings news the company reported 
a 9 percent gain in profits on strong results from key drug 
sales.  On top of the positive numbers, management says they will 
divest themselves of lower-margin businesses like their Clairol 
beauty line and refocus on drug operations like their newly 
acquired DuPont pharmaceuticals company.  

So what's not to like?  Hard-nosed bears could claim that BMY may 
suffer from key drugs losing patent protection which in turn will 
make sales susceptible to cheaper generic drugs.  BMY has already 
seen that happen with their BuSpar drug just this year.  Yet the 
company is focusing more on the their drug divisions and willing 
to make appropriate acquisitions and ingeniously reengineered one 
brand name drug, Glucophage, so that the company will keep its 
patent protection on the new improved versions.  So again we ask 
ourselves, what's not to like?  Honestly, we see BMY as a 
potential victim to a couple of issues.  One, the market still 
maintains a bullish bias.  It may be a fragile bullish bias but 
the trend is still up in both the Nasdaq and the Dow.  As the 
broader market continues to advance money should rotate out of 
defensive sectors like drugs and BMY will under perform the 
market.  Now that the company has reported earnings we may see 
more of a "sell the news" affect as traders rotate into other 
stocks that may have more impressive results or more impressive 
guidance going forward.  Two, technically the stock is running 
out of steam.  BMY has not been able to close over the $60 since 
mid-March.  It's barely been able to even trade above the $60 and 
that was in late March.  After struggling to break above this 
level for the last week or more shares collapsed today back under 
the 200-dma (58.12).  We realize that this is only a few cents 
away but the message is pretty discouraging for the bulls.  
Consider that our pivot point of $60 is only a couple of points 
away and the stock is actually showing a bearish price objective 
of $41 we feel this is a low risk/high reward scenario.  
Obviously it won't be trading at $41 anytime soon but our short-
term downside targets are $55 and $51.  

How do you trade BMY?  We would look at BMY for two distinct 
entry points to go short.  The first and most likely is shares 
trade to 57.75 or close under $58.00 (depending on your activity 
level).  The second entry could unfold with BMY bouncing back to 
$60 if the broader market dips only to have the stock rollover 
under this resistance again.  The second entry provides the best 
risk reward because you don't initiate a play if BMY trades above 
$60.  On the contrary, we would actually consider a long play 
under the circumstances.  However, if it fails to trade above $60 
on any bounce or if it closes under $58 (trades under 57.75 
intraday) we would start a short position.  We're going to start 
our play with a stop at $60.25 but traders need to keep an eye on 
the Dow Jones and the Drug index (DRG.X).

Picked on October 23rd at $58.02
Gain since picked:         +0.00
Earnings Date              10/23 (confirmed)





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

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

Biomet Inc - BMET - close: 31.55 change: -0.44 stop: 29.50 

Today's market dip ended hopes of a four-day winning streak for 
shares of BMET.  Trading higher in the morning, BMET succumbed to 
renewed Anthrax fears like the rest of the market.  Traders 
should continue to enter positions in BMET carefully.  The stock 
is a definite leader in the group (and a component of the HCX) 
but we're seeing several healthcare stocks starting to crumble.  
That doesn't mean we can't play the divergence but a faltering 
sector will make BMET's road higher tougher than it needs to be.  
If you've been following our other healthcare play, THC, then you 
know that healthcare bulls are probably very frustrated.  Every 
time the sector gets moving, breaks out above resistance or has a 
strong day the next day bears take it all or most of it back.  
The fact that the stock appeared to bounce above the $31 level 
and closed over 31.50 is very positive but we would be looking 
for a confirming move up from here or another dip back towards 
$30.  Don't feel the need to rush into a long position for BMET 
as we doubt it will "get away" from us.  No change in our stop.

Picked on October 2nd at $30.35
Gain since picked:        +1.20
Earnings Date             09/20 (confirmed)




---

CBRL Group Inc - CBRL - close: 25.02 change: -0.28 stop: 22.85

Our bullish play in CBRL is moving in our favor.  The stock 
produced a strong day on Monday adding almost a dollar.  The 
Monday move came on very strong volume of over 2 million shares 
helping confirm the new trend (and probably scaring more than a 
few shorts).  The lower volume pullback on Tuesday was probably 
just a little profit taking.  CBRL displayed good relative 
strength as well.  While the rest of the markets sold off on the 
Anthrax news, CBRL merely hovered near the $25 level.  We'd like 
to move our stop up but our gut says we might get a dip back to 
$24 (or $24.25) if the market pulls back again tomorrow.  Why the 
dip?  The previous 52-week high was 24.25 set back on December 
8th, 2000.  Last week's technical breakout over $23.50 and over 
the old 52-week high grabbed some attention.  However, it is 
common for the stock to pullback to the previous resistance 
before trading higher.  Investors who feared they have missed 
their entry may jump in if it comes back to the $24 level.  We 
don't want to move our stop too close and risk getting swung out 
on a play that has so much potential for a decent sized run.  Any 
pullback towards the $24 level should be a good entry point.  
Once the stock bounces higher again we'll move our stop up 
accordingly.  It is possible that the stock doesn't pullback and 
you'll have to watch the $25 level.  If you do enter at a higher 
level then consider using a tighter stop than we have listed with 
$24 as support.  At the moment our short-term target is $28.00.

Picked on October 12th at $24.36
Gain since picked:         +0.66
Earnings Date              11/21 (not confirmed)





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

Fannie Mae - FNM - close: 80.45 change: -0.38 stop: 83.50

We find it interesting that FNM actually closed negative on 
Monday while the Dow Jones added over 170 points.  We realize it 
was only a fractional loss but why didn't the mortgage giant 
rally with the market?  Probably because the 30-year bond yield 
only dipped a little after the big Friday move higher.  We had 
anticipated a noticeable drop in FNM due to Friday's big jump in 
bond yields but the big market day appears to have postponed the 
move.  Fast forward to Tuesday and we get another big up move in 
the 30-year yield.  This time shares of FNM slip again but only 
fractionally.  We are seeing lower highs which is forecasting a 
bearish bias but the $80 level has been stronger than we 
expected.  One catalyst that might help push FNM over the edge 
was a surprising story from HRB.  H&R Block's stock has been an 
exceptional winner these last several months.  Yet the last 
couple of days the stock has seen very heavy selling.  Today the 
media reports that analysts are concerned about HRB's mortgage 
lending operations and how they might affect the bottom line.  If 
the street is worried about HRB's mortgage activities, how much 
more will they be concerned over FNM's?  Obviously, HRB is seen 
as more at risk because their Option One unit catered to higher 
risk customers.  Yet the market only needs the appearance of risk 
to send shares of associated stocks lower.  Tomorrow will be an 
interesting day as we see how FNM reacts.  

Picked on October 19th at $80.99
Gain since picked:         +0.54
Earnings Date              10/15 (confirmed)




---

Suntrust Banks - STI - close: 59.72 change: +0.24 stop: 60.25 

Tomorrow may be a turning point day for shares of STI as well.  
This morning, rival bank Wachovia (NYSE: WB) reported their 
earnings and produced a net loss.  Analysts had been expecting 
earnings of 66 cents and WB only turned in 61 citing slowing 
economy and merger costs with First Union (the bank that beat STI 
out of their own merger bid for WB).  Even though STI has already 
reported their own earnings for the quarter any weakness in WB or 
the rest of the financial sector should be able to carry over 
into STI.  Our last couple of updates have discussed how cautious 
bears should wait for STI to confirm the new trend down by 
closing under $58.  So far it has yet to occur.  When shares 
started trading higher today we thought this would end our play.  
Yet surprisingly there was strong selling right at $59.98 early 
this morning and again at $59.85 in the afternoon.  While odds of 
being stopped out are currently high we were surprised by today's 
action and would be happy to see the stock slip tomorrow.  We 
continue to urge caution and to wait for the stock to confirm 
with a close under $58.  However, if the market looks like it 
will be weak tomorrow, aggressive  traders can consider a very 
low risk short play as our suggested stop is not very far away.

Picked on October 12th at $59.85
Gain since picked:         +0.13
Earnings Date              10/10 (confirmed)




===============
AT CLOSED Plays
===============

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

Sysco Corp - SYY - close: 24.86 change: +0.61 stop: 25.00 

What appeared to be the beginning of a breakaway gap may 
eventually turn out to be nothing but a failed rally.  Shares of 
SYY opened higher this morning and eventually stopped us out at 
$25.00.  The high for the day was only 25.13 but what traders 
should notice is the intraday chart shows a lot of selling 
pressure between $25.00 and $25.10.  By the end of the day the 
stock began to slip and remained under the $25 resistance level.  
At it's best our short on SYY produced a move from $26.12 to the 
$24.00 level or about 8%.  The play closes with a positive 4% 
difference.  We're not convinced that SYY is ready to reverse 
course yet and bears should be watching for a close under $24 
while the bulls should watch for a breakout over $25 or $26 
depending on your risk tolerance.

Picked on October 5th at $26.12
Gain since picked:        +1.12
Earnings Date             10/17 (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 

SNP     China Petro & Chemical     14.70     +0.85
CWP     Cable & Wireless           14.70     +0.71
HLT     Hilton Hotels Corp          8.98     +0.58
LIZ     Liz Claiborne Inc          45.10     +1.00
HBIO    Harvard Bioscience Inc     11.55     +0.65

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

AWE     AT&T Wireless              14.20     +1.26
TLCP    Telecorp                   12.39     +1.10
TUNE    Microtune Inc              18.39     +2.28
TZIX    Trizetto Group             11.10     +1.33
JDAS    Jda Software Group         17.10     +1.35

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

OMC     Omnicon Group Inc          78.10     +4.17
MCK     McKesson Corp              38.95     +1.56
GENZ    Genzyme Corp               50.59     +1.89
AL      Alcan Inc                  32.55     +1.04
DHR     Danaher Corp               58.26     +1.60

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

SBC     Sbc Communications         38.78     -2.62
PHA     Pharmacia Corp             38.39     -4.37
NOC     Northrop Gruman Corp      100.00     -5.50
HRB     H&R Block                  32.78     -2.92
AHC     Amerada Hess               62.50     -2.06

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

EPG     El Paso Corp               50.67     -1.90
MCO     Moody's Corp               35.03     -1.44
HHS     Harte-Hanks Inc            22.79     -0.36
TRDO    Intrado Inc                28.74     -2.79



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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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For more information on advertising in PremierInvestor.net
Newsletter, or any Premier Investor Network newsletter please
contact Contact Support.

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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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