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Daily Newsletter, Thursday, 11/01/2001

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PremierInvestor.net Newsletter               Thursday 11-01-2001
                                                  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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To view this email newsletter in HTML format with imbedded
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In section one:

Market Wrap: Tech rally lead by Microsoft
Market Sentiment: Selective hearing
Play-of-the-Day: Rally On Bad News

-----------------------------------------------------------------
U.S. Market Numbers
-----------------------------------------------------------------
MARKET WRAP  (view in courier font for table alignment)
-----------------------------------------------------------------
       11-1-2001            High     Low    Volume Advance/Decline
DJIA     9263.90 +188.76  9284.45  9014.46  1.3 bln   2223/ 880
NASDAQ   1746.30 + 56.10  1746.65  1683.99  1.7 bln   2060/1477
S&P 100   558.24 + 13.81   559.15   542.09   Totals   4283/2357
S&P 500  1084.10 + 24.32  1085.61  1054.31
RUS 2000  434.88 +  6.71   434.88   424.84
DJ TRANS 2232.98 + 37.14  2242.96  2179.83
VIX        34.18 -  1.19    36.97    33.83
VXN        61.18 -  1.17    63.13    60.92
TRIN        0.88
Put/Call Ratio       .64
-----------------------------------------------------------------

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

Tech rally lead by Microsoft

The broader market averages ended the day bullish as investors 
got a good dose of good news and bad news to digest.  By sessions 
end, the market voted to the upside as the Dow Industrials jumped 
2%, the S&P 500 gained 2.2% and the NASDAQ Composite rose by 3%.

The common denominator in all three of these major averages was 
software giant Microsoft (NASDAQ:MSFT) which gained 6.34% to 
$61.84 after early morning rumblings that the company was nearing 
a potential settlement with the Justice Department regarding its 
antitrust case.

Microsoft Chart - 





The supply/demand chart for Microsoft continues to look bullish 
longer-term and today's news had the stock reversing back into a 
column of X's (3-box reversal measures meaningful moves) and a 
trade at the $64 level would have the stock breaking a major 
level of resistance.  The current bullish price objective using 
the vertical count technique indicates a longer-term price 
objective of $72.  Microsoft's point/figure chart has had an 
uncanny "ability" to achieve both bullish and bearish price 
objectives in past years.  In early October, the first buy signal 
off the bottom and vertical count there gave hint of bullishness 
longer-term to $79, but was invalidated with the sell signal at 
$54.  The reversal higher from that point gives us our current 
bullish price objective.

Also worth noting is the triple top "buy signal" created at $59.  
The statistical probability (from Purdue University Study) of 
bullish gains from the triple top indicate a trade established 
there would have a 87.9% probability of 28.7% gain in 6.8 months 
time frame on average.

The potential "SPREAD triple-top" at $64 is only profitable 85.7% 
of the time, with an average gain of 22.9% over a 7.7 months 
time.

Now the bad news

Many believe today's "bad news" was already baked into the cake 
we call the market.  The National Association of Purchasing 
Management (NAPM) number came in well below economist's 
expectations of 44.3 with a 39.8 reading.  The NAPM number had 
stocks giving back early session gains, but bulls got back to 
their hooves within the hour and pushed stock higher into the 
close.  The October reading of 39.8 was much lower than 
September's level of 47.0 and was the lowest reading since 
February 1991.

Construction spending in September fell 0.4%, and came in 
slightly better than estimates looking for a decline of 0.8%.  In 
August, construction spending fell 1.2%, so today's number here 
showed some tapering off of recent decline.

More news in the wings

Tomorrow we get more economic data and at this point it is very 
difficult to determine just how the market is going to respond to 
the number.  Traders and investors would have thought today's 
NAPM number could have provided a "nail in the coffin" for a post 
Halloween trick, but that sure didn't happen.

Tomorrow we get October jobless data before the markets open for 
trading.  Non-farm payrolls are expected to come in at -293,000, 
while the jobless rate is expected to increase to 5.2%.  Also due 
out are average hourly wages.  Expectations there are for hourly 
wages to increase a modest 0.2%.

For brunch at 10:00 am EST, September factory orders will be 
released.  Estimates are for orders to decline 4.9%.  In August, 
factory orders fell 0.6% and current estimates take into 
consideration terrorist events in September.

Zero percent brings in buyers

The worlds top two automobile manufacturers; General Motors 
(NYSE:GM) $42.30 (+2.37%) and Ford Motor (NYSE:F) $16.37 (+1.99%) 
said that their U.S. sales for October rose more than 30% from 
last year.  Daimler Chrysler (NYSE:DCX) $36.00 (+4.04%) said 
sales rose a modest 5% from last year, but October sales were its 
best retail numbers to date.  Zero percent financing enticed 
buyers to move cars off the lots even as economic woes and 
political turmoil get headlines on a daily basis.

GM said sales rose to 554,652 cars and trucks.  Trucks were the 
favorite among purchasers as 47% of unit sales were trucks.  Cars 
accounted for 16% of sales.  SUV's, minivans and other fossil-
burners also found unit increases.

Ford sold 418,243 vehicles in the U.S. during October, marking a 
34% rise over year ago levels.  Ford sold 259,247 trucks and 
158,996 cars.  Newly appointed CEO Bill Ford Jr. said the popular 
F-series truck saw sales hit "unimaginable" total unit sales of 
102,424.

Industry executives admitted they didn't feel sales would stay at 
current levels and they would inevitably taper off as zero 
percent financing deals expire later this month.

Bad news equals good news?

At the end of today's action, I'm looking for the line labeled 
"confused."  I've said before that it's more important to trade 
the market reaction than it is to trade the news, but today's 
market gains just show how the market sometimes searches out its 
own path and cuts a trail to a destination that remains most 
uncertain.

Martin Zweig once said, "To me, the 'tape' is the final arbiter 
of any investment decision.  I have a cardinal rule: Never fight 
the tape!"

I've learned the same thing over time.  Simply looking at today's 
news out of the "Big 3" automakers has be a bit surprised that 
Daimler Chrysler posted the biggest gain in percentage terms.  
Add to that yesterday's downgrade of Daimler Chrysler's long-term 
debt rating to "BBB+" from "A-" by Standard and Poor's and you 
have a less-compelling fundamental reason for the stock to post a 
4% gain today.

GM and Ford had their long-term debt downgraded earlier, so 
Daimler Chrysler isn't the only one that S&P has been 
downgrading.

Dr. Silber smiles

I don't mean to be throwing quotes around, but sometimes it sure 
keeps me honest, unbiased and not grabbing for reasons why 
something took place.  I get a ton of e-mail asking for 
explanations on why a stock or even the bond market is responding 
in a certain way.  Sometimes I can put together an educated and 
historical scenario, but sometimes things just don't have a 
logical explanation.  The explanation usually doesn't make itself 
apparent for months.

I like to show point and figure charts like the one of Microsoft 
(MSFT) that simply measures supply and demand.  It's often times 
amazing how a simple X and O chart says "buy, buy, buy, buy" or 
"sell, sell, sell, sell."

Today, Dr. William Silber (N.Y.U) would be smiling as it relates 
to his quote in Newsweek, 1986.  "If the models are telling you 
to sell, sell, sell, but only buyers are out there, don't be a 
jerk.  Buy!

Today, the market simply had a lot of buyers that outnumbered 
sellers.  Perhaps there were just too many models saying "sell."


Jeff Bailey
Senior Market Technician


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

Selective hearing.
by Russ Moore

Selective hearing. When conversing with my wife, she sometimes 
engages in a practice that I have come to call “selective 
hearing”. Depending on the topic of our conversation, she has the 
uncanny ability to tune me in, or out, at her discretion. What 
has this got to do with the markets you ask? Today’s Wall Street 
performance got me thinking that my wife is not the only one 
privy to this special skill, as investors shut out all of the 
dismal economic data, choosing instead to focus on the Microsoft 
news.

Talk of a tentative agreement in the Microsoft antitrust case led 
the markets on an all out rally with the DOW gaining +2.1 
percent, while the NASDAQ and NDX added +3.3 and +4.4 percent 
respectively.

Volume was decent with 1.29 billion shares trading hands on the 
big board and 1.78 billion shares moving on the NASDAQ. Winners 
outpaced losers by a 22/9 count on the NYSE and a 21/15 margin on 
the tech index.

Gold and natural gas were the only sectors failing to post green 
arrows. Hardware, software, chips and computers were the leaders 
on the tech side while cyclical, drug, retail, and financials 
attracted the bulk of the buying on the broader markets.

Today’s National Association of Purchasing Managers Index (NAPM) 
fell to 39.8 from September’s 47.0. Expectations were for a 
decline to 44.3. September new orders were seen as a positive 
when they came in at 50.3, however, that optimism was eliminated 
with today’s number showing a decline to 38.3 for October.

Personal spending was off -1.8 percent, the largest monthly 
decline since December 87’. Personal income was unchanged.

Non-farm payrolls, unemployment, factory orders, and hourly 
earnings are all on the economic docket for tomorrow. Needless to 
say, the unemployment number will play a large roll in tomorrow’s 
stock market performance. 

Sentiment continues to have a bullish bias, at least on the tech 
side. Let’s not forget however, that the last couple of days have 
been fairly calm on the war front (thank goodness), and any 
negative developments could spell trouble for the current rally.

VIX 
Thursday 11/01 close: 35.28


VXN
Thursday 11/01 close: 62.42


30-yr Bonds
Thursday 11/01 close: 4.88


Total Put/Call Ratio: .64


Equity Option Put/Call Ratio: .48


Index Option Put/Call Ratio:  1.66


===

NASDAQ 100 Index (NDX/QQQ)
52-Week High: 103.51
52-Week Low:   28.19
Current close: 35.34

Volume/Open Interest
Maximum calls: 35/60,514
Maximum puts : 33/82,772

Moving Averages
 10 DMA 34
 20 DMA 33
 50 DMA 33
200 DMA 43

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: 558.24

Volume/Open Interest
Maximum calls: 560/5,998
Maximum puts : 480/8,234

Moving Averages
 10 DMA  556
 20 DMA  555
 50 DMA  556
200 DMA  618

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: 1084.10

Volume / Open Interest
Maximum calls: 1100/18,019
Maximum puts :  950/22,640

Moving Averages
 10 DMA 1082
 20 DMA 1080
 50 DMA 1085
200 DMA 1200

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:  9,263.90

Volume / Open Interest
Maximum Calls: 94/24,985
Maximum Puts   92/21,409

Moving Averages:
 10 DMA  9,300
 20 DMA  9,268
 50 DMA  9,384
200 DMA 10,258

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: 557.28

Volume / Open Interest
Maximum Calls: 580/  517
Maximum Puts:  420/1,576

Moving Averages
 10 DMA 540
 20 DMA 511
 50 DMA 495
200 DMA 538

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: 478.09

Volume / Open Interest
Maximum Calls: 570/ 503
Maximum Puts:  420/ 788

Moving Averages
 10 DMA 454
 20 DMA 445
 50 DMA 466
200 DMA 579

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

==

Pharmaceutical Index (DRG)
52-Week High:  455.28
52-Week Low:   339.49
Current close: 392.78

Volume / Open Interest
Maximum Calls: 420/ 284
Maximum Puts:  400/1000

Moving Averages
 10 DMA 393
 20 DMA 394
 50 DMA 388
200 DMA 393

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 10/26
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 
10/09/01     369,049   407,804   (38,755)   (10.6%)
10/16/01     378,866   415,289   (36,423)   ( 6.0%
10/23/01     377,177   413,658   (36,481)     0.1%

 
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
10/09/01       122,292    74,539    47,753    (5.2%)
10/16/01       124,568    73,779    50,789     6.3%
10/23/01       127,016    71,212    55,804     9.9%
  
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 
10/09/01      24,662    38,020   (13,358)   21.5%
10/16/01      27,398    40,397   (12,999)   (2.7%)
10/23/01      29,920    40,358   (10,438)  (19.7%)

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
10/09/01       11,948     7,012    4,936      20.0%
10/16/01       12,901     6,893    6,008      21.7%
10/23/01       11,567     6,934    4,633     (22.9%)

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 
10/09/01      24,873    10,194   14,679     16.2%
10/16/01      25,402    10,267   15,135      3.1%
10/23/01      25,568    11,832   13,736     (9.2%)

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
10/09/01       3,517    12,294    (8,777)     23.0%
10/16/01       4,514    12,104    (7,590)    (13.5%)
10/23/01       4,902    11,900    (6,998)     (7.8%)
 
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        +55,804     +50,789        -36,481     -36,423

Total Open
Interest %       (+28.15%)  (+25.61%)     (-4.61%)   (-4.59%)
                 net-long   net-long      net-short  net-short


                     Small Specs             Commercials
DJIA futures     (Current) (Previous)    (Current) (Previous)
Open Interest
Net Value          -6,998     -7,590          +13,736    15,135
Total Open
interest %       (-41.65%)    (-45.67%)      (+36.73%)  (+42.43%)
                 net-short   net-short     net-long    net-long


                     Small Spec              Commercials
NASDAQ 100      (Current) (Previous)    (Current) (Previous)
Open Interest
Net Value         +4,633      +6,008         -10,438    -12,999

Total Open
Interest %        (+25.04%)   (+30.35%)     (-14.85%) (-19.17%)
                 net-long   net-long      net-short net-short


What COT Data Tells Us
----------------------
Indices:.Another flat week as Commercials hold steady on their 
S&P net-short contracts.

Gold:.Commercials cut their short contracts in half this week. 
Gold has certainly cooled off in the last month; however, another 
switch to a net-long position could see gold on the rise once 
again.

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
10/23 25,191 contracts net-short

Data compiled as of Tuesday 10/23 by the CFTC.


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

Clorox Co. - CLX - close: 37.48 change: +1.78 stop: 35.95

Company Description
The giant household products maker with several name brands 
produces charcoal, cat litter, insecticide, dressings, sauces, 
food storage and cleaning products.  The California-based Clorox 
Co. produced sales of $3.9 billion as of June 30th, 2001.

Why We Like It:
Any stock that can rally on bad news sounds like a potential 
winner to us.  CLX came out with their earnings report today with 
net income falling 19 percent.  Management was quick to counter 
that overall volume was up across several products but earnings 
came in at 33 cents well below the estimate of 37 cents a share.  
One would normally expect a stock that missed earnings by such a 
wide margin to get spanked at the open.  Quite the opposite 
occurred.  Shares immediately rallied higher and ended the day 
with a 5% gain (okay, 4.98%).  CLX management also told analysts 
that they would be cutting jobs to help reduce costs while also 
raising their earnings estimates for the year.  These two 
developments along with a defensive product line (people are 
still going to buy cat litter and bleach during a recession) are 
probably what spurred the rally today.  Speaking of a rally, the 
stock burst above price resistance at $37.00 and $37.50 while 
also closing above its 50-dma.  On top of it all the big move 
today came on extremely large volume of 4 million shares versus 
the normal 750K a day.  Sounds like there are some "big" 
investors that want some of this company.  Our first comment upon 
looking at a chart of CLX was to argue the next level of strong 
overhead resistance is close by at $39.25.  That doesn't sound 
like a big enough reward to put money at risk in the markets.  
Yet consider this, if the new trend for consumers is to cocoon 
themselves at home and the economy continues to retract CLX 
should still see solid earnings even if growth is in the single 
digits.  Besides, historically shares of CLX tend to do pretty 
well the first two or three weeks of November anyway.  We are 
going to start the play with a stop at 35.95.  If you are feeling 
more conservative you could attempt to play with a stop just 
under $37.00 (maybe 36.50 or 36.75) as previous resistance ($37) 
should now become new support.  However, at this time we don't 
want to get stopped out prematurely on an intraday swing.  We 
will raise our stop quickly if CLX confirms the move up.

Picked on November 1st at $37.48
Gain since picked:         +0.00
Earnings Date              11/01 (confirmed)





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

PremierInvestor.net Newsletter                  Thursday 11-01-2001
                                                     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/9522_2.asp
=================================================================

In section two:

Net Bulls
  Closed Bearish Play: QCOM

Stock Bottom / Active Trader
  New Bullish Play:     CLX
  Bullish Play Updates: BMS
  Bearish Play Updates: BMY, HCR, HD, SPC
  Closed Bullish Plays: CBRL
  Closed Bearish Plays: FNM

Split Trader
  - none -

Trading Ideas
  Value Plays With Bullish Signals
  Breakout to Upside (Stocks $5 to $20)
  Breakout to Upside (Stocks over $20)
  Breakout to Downside (Stocks over $20)
  Recently Overbought With Bearish Signals (Stocks over $20)


==================================================================
Net Bulls (NB) / Tech Stock section
==================================================================

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

  --------------------
  Closed Bearish Play
  --------------------

Qualcomm - QCOM - close: 51.50 change: +2.38 stop: 51.55

Beep, beep, beep...WHAMMY!  Multiple factors played into the 
markets rally today but probably the biggest was leadership by 
MSFT which influenced the move in the Nasdaq, Dow Jones and the 
S&P 500.  New inspiration in the face of terrible economic news 
but bulls in a buying mode that sent several tech sectors higher.  
QCOM, while enjoying the rally, was somewhat subdued to a few of 
its tech compatriots.  We were not stopped out of this short play 
until the last half hour of trading.  We knew this was more of a 
gamble when we elected to go short yesterday evening (and we said 
so).  The first level of overhead resistance should be between 
$56 and $57.  Look for earnings near the 6th of Nov.

Picked on October 31st at $49.05
Gain since picked:         -2.50
Earnings Date              11/06 (not confirmed)





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

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

  --------------------
  New Bullish Play 
  --------------------

Clorox Co. - CLX - close: 37.48 change: +1.78 stop: 35.95

Company Description
The giant household products maker with several name brands 
produces charcoal, cat litter, insecticide, dressings, sauces, 
food storage and cleaning products.  The California-based Clorox 
Co. produced sales of $3.9 billion as of June 30th, 2001.

Why We Like It:
Any stock that can rally on bad news sounds like a potential 
winner to us.  CLX came out with their earnings report today with 
net income falling 19 percent.  Management was quick to counter 
that overall volume was up across several products but earnings 
came in at 33 cents well below the estimate of 37 cents a share.  
One would normally expect a stock that missed earnings by such a 
wide margin to get spanked at the open.  Quite the opposite 
occurred.  Shares immediately rallied higher and ended the day 
with a 5% gain (okay, 4.98%).  CLX management also told analysts 
that they would be cutting jobs to help reduce costs while also 
raising their earnings estimates for the year.  These two 
developments along with a defensive product line (people are 
still going to buy cat litter and bleach during a recession) are 
probably what spurred the rally today.  Speaking of a rally, the 
stock burst above price resistance at $37.00 and $37.50 while 
also closing above its 50-dma.  On top of it all the big move 
today came on extremely large volume of 4 million shares versus 
the normal 750K a day.  Sounds like there are some "big" 
investors that want some of this company.  Our first comment upon 
looking at a chart of CLX was to argue the next level of strong 
overhead resistance is close by at $39.25.  That doesn't sound 
like a big enough reward to put money at risk in the markets.  
Yet consider this, if the new trend for consumers is to cocoon 
themselves at home and the economy continues to retract CLX 
should still see solid earnings even if growth is in the single 
digits.  Besides, historically shares of CLX tend to do pretty 
well the first two or three weeks of November anyway.  We are 
going to start the play with a stop at 35.95.  If you are feeling 
more conservative you could attempt to play with a stop just 
under $37.00 (maybe 36.50 or 36.75) as previous resistance ($37) 
should now become new support.  However, at this time we don't 
want to get stopped out prematurely on an intraday swing.  We 
will raise our stop quickly if CLX confirms the move up.

Picked on November 1st at $37.48
Gain since picked:         +0.00
Earnings Date              11/01 (confirmed)





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

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

Bemis Co. - BMS - close: 44.39 change: +1.12 stop: 42.10

Our long play on flexible packaging maker, Bemis, hung in there 
on Wednesday hovering above the $43 level but Thursday was 
another story.  The morning dip in the Dow Jones towards the 9000 
level sent BMS falling quickly but the stock found buyers at 
42.60 and quickly rebounded with the broader market advance.  
This put the intraday bottom about 20 cents above the 50-dma and 
the strong rebound on strong volume is encouraging.  Chart 
readers may notice that BMS could be forming a flag pattern.  
This is usually a period of consolidation at a contradictory 
angle to the previous trend.  In this case the previous trend was 
bullish and thus the flag has been flying slightly lower 
(relatively lower highs and lower lows).  A confirmation that the 
bullish trend is intact could occur once shares break back above 
the $45 level.  A true breakout to a new high won't happen until 
shares close over 45.50.  Plan your entry according to your risk 
tolerance.  For some traders the bounce today was all they 
needed.  For others, it is completely fine to wait for shares to 
reconfirm the bullish trend.  We will probably raise our stop if 
the stock can close above the 45.50 level.

Picked on October 26th at $44.99
Gain since picked:         -0.60
Earnings Date              10/23 (confirmed)





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

Bristol Myers Squibb - BMY - cls: 54.26 chg: +0.81 stop: 55.10 

Surprise!  The drug index produced a solid move in the broad 
market rally today and BMY bounced higher but remained under our 
stop of 55.10.  It's very possible that we'll get stopped out 
tomorrow if the DRG.X can execute another strong day like it had 
today.  On the other hand shares of BMY could merely rally to the 
50% retracement level (from the Sept. low to the Oct. highs) at 
55.20 before rolling over again but that would still stop us out.  
Longer-term bears on the drug sector (or just BMY) can watch for 
shares to rollover again if you believe they will continue to the 
$51 level.

Picked on October 23rd at $58.02
Gain since picked:         +3.76
Earnings Date              10/23 (confirmed)




---

Home Depot Inc - HD - close: 38.40 change: +0.17 stop: 39.25

The personal spending numbers that came out today were nothing to 
get excited about but some bullish comments on Wal Mart (WMT) 
helped push the stock higher.  Since WMT is the biggest component 
of the Retail index (RLX) it boosted the sector which in turn 
helped push HD higher.  Another factor HD bears need to consider 
is the recent move by the Treasury department to discontinue the 
30-year bond.  If you were watching the markets today you saw 
several homebuilders and long-term lenders rally on the 
expectation that lower long-term interest rates would spur new 
home sales.  This in turn could be a catalyst for sales at home 
improvement and homebuilder retailers like HD.  Fortunately for 
the shorts the $39 level has remained stiff resistance for the 
last two days in a row.  Yet if the broader markets can mount a 
Friday rally we would expect to be stopped out.  On the other 
hand, if the HD rallies to $39 again and then falters, maybe back 
tot he $37.20 level, we'd probably see that as a new potential 
entry point to go short.

Picked on October 30th at $37.60
Gain since picked:         -0.80
Earnings Date              11/14 (not confirmed)




---

Manor Care - HCR - close: 23.03 change: -0.33 stop: 25.25

Here we have an interesting development.  The S&P healthcare 
index (HCX) rallied with the broader markets trading right 
beneath its 200-dma.  In contrast, shares of HCR slipped another 
1.4% and trading under our 23.60 trigger for more aggressive 
traders (this actually occurred yesterday).  This weakness in the 
face of a strong market rally and a positive move in the sector 
is confirming we may have the right stock for a short play.  To 
make matters worse for the bulls, today's loss came on volume of 
1.2 million shares which is almost double the average.  At the 
moment, the newsletter is up about 5% on this bearish play.  
Considering the recent volatility in the markets some traders may 
want to take profits and look elsewhere (or for the next 
breakdown).  We still want to see shares of HCR breakdown below 
the $22.50 level but more aggressive shorts looking for an early 
entry may want to consider an entry if HCR falls under $23 again. 

Picked on October 26th at $24.23
Gain since picked:         +1.20
Earnings Date              10/26 (confirmed)




---

St Paul Co. - SPC - close: 48.01 change: +2.11 stop: 48.25

Ouch!  We hope traders looked for confirmation first as shares of 
SPC helped lead the Insurance sector higher with a 4.59% gain 
that erased most of Wednesday's losses.  Yesterday we discussed 
how a breakdown below the 200-dma could be a good trigger point 
to go short SPC with the larger breakdown in the sector.  This 
has yet to occur but we could still see investors sell into 
strength heading into the weekend.  Unfortunately we are 
expecting to get stopped out tomorrow with a continuation of the 
broader market rally into the morning hours of Friday's session.  
Both $48.00 and $48.14 are varying levels of overhead resistance 
but if they don't hold bears could lean on the stock if it trades 
to $50 again.  A rollover from this point would be the best entry 
as a trader can limit risk with such a small spread but we would 
probably want to see the stock back below 47.25 to confirm the 
move down.

Picked on October 31st at $45.90
Gain since picked:         -2.11
Earnings Date              10/23 (confirmed)





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

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

CBRL Group Inc - CBRL - close: 25.16 change: +0.05 stop: 24.60 

The early morning dip in the Dow Jones towards 9000 seemed to 
affect all the restaurant stocks the same.  Unfortunately, shares 
of CBRL dipped below our stop at 24.60 and headed to the second 
level of support discussed on Tuesday (24.25).  However, CBRL 
only slipped to 24.43 before the broader market rally took hold 
and brought shares back above the $25 level.  We still like CBRL 
and as long as shares stay above 24.25 investors should do okay.  
Overhead resistance is at $26.

Picked on October 12th at $24.36
Gain since picked:         +0.24
Earnings Date              11/21 (not confirmed)





  -------------------
  Closed Bearish Play
  -------------------

Fannie Mae - FNM - close: 82.63 change: +1.67 stop: 80.99 

As we expected shares of FNM soared today along with other
major lenders and home builders while financials focused on 
shorter term lending came under selling pressure.  With FNM 
opening at 80.96 today we were quickly stopped out at our new 
stop from Wednesday's update at 80.99.  This produced a net 
gain/loss of zero on this bearish play (not taking into account 
the maxim that time is money).  It will be interesting to see how 
the interest rate game plays out.  Will the markets continue to 
buy home builders on the basis that long-term rates will drop 
further and stay low or will there be a reversal in the next 
couple of weeks as the market recognizes risk that interest rates 
will need to rise.

Picked on October 19th at $80.99
Gain since picked:         +0.00
Earnings Date              10/15 (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 

SI      Siemens Aktkien            50.25     +1.84
DB      Deutsche Bank Ag           57.60     +2.20
CMVT    Comverse Technology        19.92     +1.11
AMD     Advanced Micro Devices     11.50     +1.66
DRE     Duke Realty Corp           23.60     +0.55

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

ARMHY   Arm Holdings Plc Ads       16.75     +1.35
NTAP    Network Appliance Inc      15.72     +2.42
CMOS    Credence Systems Corp      15.18     +1.58
RSAS    Rsa Security Inc           13.16     +1.12
KLIC    Kulicke & Soffa            17.00     +1.83

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

AZN     Astrazeneca Plc            46.90     +1.79
GIS     General Mills Inc          47.00     +1.08
WWY     William Wrigley Jr Co      51.22     +1.17
CLX     Clorox Co                  37.48     +1.78
CCR     Countrywide Credit         42.36     +2.43

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

WM      Washington Mutual          28.56     -1.63
CAH     Cardinal Health            65.65     -1.46
MCK     McKesson Corp              35.95     -1.04
CI      Cigna Corp                 71.61     -1.26
CSC     Computer Sciences Corp     33.94     -1.97

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

ACI     Arch Coal Inc              21.51     -0.54




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