Option Investor
Newsletter

Daily Newsletter, Monday, 11/05/2001

HAVING TROUBLE PRINTING?
Printer friendly version
PremierInvestor.net Newsletter                 Monday 11-05-2001
                                                  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
=================================================================
To view this email newsletter in HTML format with imbedded
charts and graphs, click here:
http://www.PremierInvestor.net/htmlemail/5932_1.asp
=================================================================

In section one:

Market Wrap: Cisco's pro-forma beats estimates
Market Sentiment: Cisco and the Fed
Play-of-the-Day: Failed Rally in Sector Could be Clue
Watch List: MER, RNR, CELG, HGSI, GTK, TK, MRCY, PG

-----------------------------------------------------------------
U.S. Market Numbers
-----------------------------------------------------------------
MARKET WRAP  (view in courier font for table alignment)
-----------------------------------------------------------------
        11-05-2001        High      Low     Volume Advance/Decline
DJIA     9441.00 +117.50  9476.40  9326.20 1.19 bln   2045/1074	
NASDAQ   1793.60 + 47.90  1801.55  1768.29 1.70 bln   2131/1408
S&P 100   566.68 +  6.69   569.77   559.99   totals   4176/2483
S&P 500  1102.84 + 15.64  1106.72  1087.20           
RUS 2000  437.54 +  4.47   438.24   433.07
DJ TRANS 2284.72 + 38.06  2291.78  2245.49
VIX        32.09 -  0.31    32.94    31.20
Put/Call Ratio      0.42
-----------------------------------------------------------------

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

Cisco's pro-forma beats estimates

Networking giant Cisco Systems (NASDAQ:CSCO) reported pro forma 
earnings after the close that beat estimates by 2 cents.  
Analysts were looking for pro forma earnings of 2 cents and 
tonight 4 cents has the stock bid higher to $18.50 in after-hours 
trading.

Cisco reported pro forma net income of $332 million, whish was 
down 76% from year ago pro forma net income of $1.4 billion.  Pro 
forma results exclude acquisition charges, payroll taxes on stock 
options, investments, and excess inventory benefits.  Revenues 
also fell from year-ago levels.  For the most recent quarter, 
sales came in at $4.4 billion, down 32% from $6.5 billion in the 
same period last year, but edging higher than previous quarter 
revenue of $4.3 billion.  Revenues came in slightly higher than 
analyst's revenue estimates of $4.186 billion.

Cisco Systems Chart - 





We profiled shares of Cisco (CSCO) as bullish on October 25th at 
$17.74 after the stock had traded just above our 50% retracement 
level of $17.45, but the stock just couldn't hold that level and 
we were stopped out.  However, the pullback near 38.2% 
retracement of $15.93 did find buyers and the stock has been 
moving higher since.  Our original near-term bullish targets were 
near the $18.96 level or falling 200-day MA, currently at $20.02.  
The steep decline of the 200-day moving average is going to be a 
BIG challenge for the stock soon.  Should we get a break above 
the 200-day MA on more than 200 million shares, the stock might 
be turning the corner longer-term.  Support should be firming 
near $16.

Opting for others

While some traders were willing to play Cisco before today's 
after-the-bell earnings, we thought it best to try our hand in 
some other technology stocks.  One that I personally liked was 
Adaptec (NASDAQ:ADPT) as it had a "storage" flavor and perhaps 
mixed well with some of the strength we had seen in the Disk 
Drive Index (DDX.X) as of late.

Adaptec Inc Chart - 




This weekend, we added shares of Adaptec (NASDAQ:ADPT) to the 
"Tech / Internet Stocks" long play section of PremierInvestor.net 
play list as momentum continued to build in the Disk Drive Index 
(DDX.X) last week.  This stock is not for the faint of heart, but 
technicals looked favorable for a move higher.

New section of newsletter!

Some subscribers felt we didn't have enough aggressive tech 
plays, so we added a new section to the PremierInvestor.net 
newsletter called "High Risk/High Reward."  

I see one of our play-writers didn't like one of the Disk Drive 
Index (DDX.X) components, but we still felt a trade at $20.10 
would be an action point for a bull looking to play momentum in 
the group.  The bulk of the plays you find in the "High Risk/High 
Reward" section will have action points where we look for certain 
levels up or down to trigger sharp stock price action based on 
certain characteristics we're finding in the corresponding 
sector, then carrying over that sector analysis with the stock.

Hutchinson Technology Chart - 




We felt a break above $20.10 might move some bears toward the 
door and create some "buy side" pressure in shares of Hutchinson 
Tech (NASDAQ:HTCH) as the Disk Drive Index (DDX.X) has been on a 
run.  As pointed out in Friday's "Market Wrap" stocks in this 
sector can move when they get some momentum behind them.  As you 
can see from our retracement bracket, the high/low of our bracket 
was actually established from a 3-month range dating back to May 
of 2000.  Wow!  From May 23, 2000 to August 31, 2000, shares of 
HTCH surged nearly 153% during that time.  Today, the stock 
jumped 8.5% (5.5% from $22.10 action point) and looks to be 
breaking out of consolidation.  Retracement at $21.67 and $24.50 
are near-term upside targets for the more aggressive trader.

But I want something boring!

No problem!  I love "boring" stocks that tend to not have a 
history of dramatic price movements.  Some traders/investor 
prefer stocks that have more gradual price movements to them 
based on a historical price action.

For the most part, four-lettered stocks are going to be a little 
more volatile as their market (NASDAQ) is going to be more 
volatile.  Market makers may be constantly adjusting inventory in 
some of these stocks, trading levels on a more active basis and 
just plain "moving stocks around" to create some liquidity for 
institutional orders.  

However, "listed stocks" on the New York Stock Exchange (NYA.X) 
tend to trade less volatile.  The bulk of trading takes place at 
the post on the NYSE and orders come to one point, where the 
specialist matches buyers and sellers together.  Many call the 
NYSE the "true market" where a buyers/sellers truly come together 
and buy/sell the stock listed on that exchange.  

Often times, subscribers that prefer the "less volatile and 
boring" type of stock will turn to the "Non-Tech/Active Trader" 
section of our play list.  It's probably the "non-tech" portion 
that has some of the stocks profiled there, less volatile.  Yes, 
we list them as "active trader" but these stocks tend to have 
less volatility to them, and perhaps more appropriate for the 
swing-trader or intermediate-term trader.

One way to see if a stock is "volatile" or more "boring" is to 
look at a point and figure chart of a stock.  The point and 
figure charting system tends to remove noise from a stock's chart 
as only meaningful movements in price are actually charted.

For example, the chart of Clorox (NYSE:CLX) might be considered 
less volatile.  The point and figure chart depicts that too.  If 
you pull up a chart of CLX on the point/figure chart, you'll get 
to see two-years worth of data on the screen.  If you pull up a 
chart of eBay Inc. (NASDAQ:EBAY) you'll only see just 6-months 
worth of data.  The lesser amount of time you see on the chart of 
EBAY is due to the volatility of the stock as the chart often 
times whips around as it puts together 3-box reversals.

But just because a stock isn't "volatile" doesn't mean a 
trader/investor can't make money.  Sometimes a stodgy stock like 
Clorox (NYSE:CLX) can make some nice moves, up and down in a 
rather short period of time.

Clorox Company Chart - $1 box





Every day, a bar chart gives you a bar that records that day's 
activity.  A point and figure chart will culminate trading, day 
after day as long as there is not a 3-box reversal.  A neat 
feature that www.stockcharts.com offers, is for the technical 
analyst to actually "turn on" the volume and understand how much 
volume it took to move the stock in the direction of trading.  As 
you can see, shares of CLX moved higher from $31-$39 in a 4-month 
time frame and it took approximately 551 million shares of volume 
to do so.  The recent pullback to $35 came on relatively light 
volume of 184 million shares, until the most recent upward move 
to $38 reversed the chart 3-boxes and now has us back in a column 
of X's.  While buyers and sellers coming together create volume, 
price action is determined only by supply demand factors.  You 
can see from the above chart that there isn't a lot of volatility 
in shares of Clorox.  While I can't print the entire chart of 
Clorox in the newsletter screen, we can look back to April of 
last year on the above chart.  If we tried doing that with many 
four-lettered stocks, we'd need a much wider field of view as 
those stocks commonly whip around and give 3-box reversals on a 
more frequent basis.

Tomorrow we get FOMC

Tomorrow, at around 2:15 pm EST, we'll get news from the Federal 
Open Market Committee (FOMC) on interest rates.  Many economists 
feel that a 25-basis point cut has been factored into the market 
at this point.  Some also feel that a more aggressive Fed cut of 
50 basis points may also have been factored into the market.

The big question is will the market "sell the news?"  If anyone 
knew that for sure, the questions would never be posed and we 
would all be rich as there would never be any uncertainty and 
we'd be trading stocks like Adaptec (ADPT) day in and day out, 
consistently booking 8% gains every day.

Unfortunately, we don't know how the market is going to respond 
to tomorrows FOMC decision.  

We consistently try to teach subscribers how to manage their 
trading/investing account toward one goal.  If you're goal for 
every trade is to make 8% consistently, while limiting losses to 
4%, then you've got some positions with nice gains in them.  We 
understand that subscribers don't play each of our trades and 
that's OK.  However, we try and not only manage our current play 
list as if it were an account, but also try and put ourselves in 
the seat of the trader that may have just taken that one single 
trade by itself.  

If I bought both Adaptec (ADPT) and Hutchinson (HTCH) today and 
find myself with some gains, I'm more prone to set a tight stop 
on one of them to help assure a profit and let the other one try 
and run should group momentum persist.  However, should the 
market decide to "sell the news" I'm most likely booking a profit 
in one of the stocks with my tight stop, taking some heat with 
the other trade on the pullback, but my account is still very 
much intact.

Jeff Bailey
Senior Market Technician


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

Cisco and the Fed, a dynamic duo responsible for a positive 
showing on Wall Street. The upcoming FOMC meeting and the 
anticipation of after the bell earnings from Cisco Systems helped 
drive the NASDAQ to a +2.7 percent gain. The big cap NDX surged 
+3.8 percent while the blue chip DOW added +1.3 percent.

Volume was on the light side with 1.18 billion shares trading on 
the big board and 1.69 billion shares moving on the NASDAQ. 
Market breadth was positive as winners out-dueled losers by a 
20/11 count on the big board and a 21/14 margin on the tech 
index.

The boards were painted green today, with only gold, oil service 
and natural gas finishing on the downside. Biotech and utilities 
were very strong on the broader markets while networking, 
hardware, software, and Internet sectors led the way for the tech 
team.

The NAPM non-manufacturing index came in at 40.6 versus the 46.4 
expected, and a far cry from last month’s 50.2.

Tech bulls will be happy with Cisco’s after hour’s earnings 
announcements. The tech behemoth came out with earnings per share 
of 4 cents, beating the street by 2 cents.

Tomorrow’s FOMC meeting is expected to deliver a .25 to.50 bps 
rate cut. Fed Funds Futures are showing a 100 percent chance of a 
quarter point cut and a sixty- percent chance of a half point 
cut.

Trim Tabs reported 3.2 billion dollars in equity fund redemptions 
for the three days ending November 1/01, and remains bearish on 
the markets.

Sentiment may favor the bullish side, however, continued equity 
outflows along with soft volume has me just a bit skeptical about 
the strength behind the bulls.



VIX 
Monday 11/05 close: 32.09


VXN
Monday 11/05 close: 59.08


30-yr Bonds
Monday 11/05 close: 4.86


Total Put/Call Ratio: .64


Equity Option Put/Call Ratio: .46


Index Option Put/Call Ratio:  2.22


===

NASDAQ 100 Index (NDX/QQQ)
52-Week High: 103.51
52-Week Low:   28.19
Current close: 36.76

Volume/Open Interest
Maximum calls: 35/63,762
Maximum puts : 33/74,279

Moving Averages
 10 DMA 35
 20 DMA 34
 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: 566.68

Volume/Open Interest
Maximum calls: 560/5,828
Maximum puts : 480/8,321

Moving Averages
 10 DMA  557
 20 DMA  557
 50 DMA  554
200 DMA  617

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: 1102.81

Volume / Open Interest
Maximum calls: 1100/17,563
Maximum puts :  950/22,604

Moving Averages
 10 DMA 1084
 20 DMA 1083
 50 DMA 1082
200 DMA 1198

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:  9,441.03

Volume / Open Interest
Maximum Calls: 94/25,347
Maximum Puts   92/20,576

Moving Averages:
 10 DMA  9,318
 20 DMA  9,297
 50 DMA  9,348
200 DMA 10,246

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: 575.19

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

Moving Averages
 10 DMA 545
 20 DMA 515
 50 DMA 496
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: 503.07

Volume / Open Interest
Maximum Calls: 570/ 506
Maximum Puts:  420/ 801

Moving Averages
 10 DMA 466
 20 DMA 453
 50 DMA 463
200 DMA 577

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: 392.59

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 11/02
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 
10/16/01     378,866   415,289   (36,423)   ( 6.0%)
10/23/01     377,177   413,658   (36,481)     0.1%
10/30/01     377,468   413,729   (36,261)   (0.06%)

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
10/16/01       124,568    73,779    50,789     6.3%
10/23/01       127,016    71,212    55,804     9.9%
10/30/01       123,546    71,225    52,321    (6.2%)
  
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 
10/16/01      27,398    40,397   (12,999)   (2.7%)
10/23/01      29,920    40,358   (10,438)  (19.7%)
10/30/01      32,055    45,574   (13,519)   29.5%

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
10/16/01       12,901     6,893    6,008      21.7%
10/23/01       11,567     6,934    4,633     (22.9%)
10/30/01       12,725     6,475    6,250      34.9%

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 
10/16/01      25,402    10,267   15,135      3.1%
10/23/01      25,568    11,832   13,736     (9.2%)
10/30/01      25,872    12,556   13,316     (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
10/16/01       4,514    12,104    (7,590)    (13.5%)
10/23/01       4,902    11,900    (6,998)     (7.8%)
10/30/01       4,261    11,220    (6,959)      0.0%
 
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        +52,321     +55,804        -36,261     -36,481

Total Open
Interest %       (+26.86%)  (+28.15%)     (-4.58%)   (-4.61%)
                 net-long   net-long      net-short  net-short


                     Small Specs             Commercials
DJIA futures     (Current) (Previous)    (Current) (Previous)
Open Interest
Net Value          -6,959     -6,998          +13,316    13,736
Total Open
interest %       (-44.95%)    (-41.65%)      (+34.65%)  (+36.73%)
                 net-short   net-short     net-long    net-long


                     Small Spec              Commercials
NASDAQ 100      (Current) (Previous)    (Current) (Previous)
Open Interest
Net Value         +6,250      +4,633         -13,519    -10,438

Total Open
Interest %        (+32.55%)   (+25.04%)     (-17.41%) (-14.85%)
                 net-long   net-long      net-short net-short


What COT Data Tells Us
----------------------
Indices:.For the third week in a row, Commercials have shown 
little change in their net-short positions on the S&P 500. We did 
see the Small Specs and Commercials move in opposite directions 
on the NASDAQ 100 with the Small Specs adding to their net-longs 
and the Commercials increasing their net-shorts.

Gold: No significant changes on Commercial positions.

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
10/30 33,199 contracts net-short

Data compiled as of Tuesday 10/30 by the CFTC.



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

Manor Care - HCR - close: 21.72 change: -0.23 stop: 22.55 *new*

Company Description:
Manor Care, Inc., through its operating group HCR Manor Care, is 
the leading owner and operator of long-term care centers in the 
United States. The company's 58,000 employees provide high-
quality care for residents and patients through a network of more 
than 500 long-term care centers, assisted living facilities, 
outpatient rehabilitation clinics and home health care offices. 
Alliances and other ventures supply high-quality pharmaceutical 
products and management services for professional organizations. 
The company operates primarily under the respected Heartland, 
ManorCare and Arden Courts names. Manor Care is committed to 
being the preeminent care provider in the industry. 
(source: company press release)

- Most Recent Comments on November 2nd, 2001 -

The healthcare sector is trading in a very similar pattern to the 
drug sector.  Both rallied right up to their 200-dma on Thursday 
and both failed to trade above this key resistance on Friday.  
With two historically defensive sectors poised to rollover our 
suspicions that money is rotating out of these groups could be 
confirmed shortly.  The good news is our bearish pick, HCR, is 
leading the way lower.  Friday's session found the stock losing 
another 4.68% by the close.  This puts the newsletter's gain in 
the short-play at 9.4% or 2.28 points.  Some of you maybe 
wondering if its too late to go bearish on HCR.  We don't think 
so.  $22.50 was a key support level that fell to strong selling 
in Friday's session.  The loss came on very strong volume of 1.1 
million shares versus the average of 681 thousand shares.  A 
closer look at the intraday charts show there was heavy selling 
pressure at 23.30 and 23.25.  Could HCR bounce on Monday?  
Absolutely, but we would expect 22.50 to act as new resistance 
and $23.00 will also act as resistance.  We are lowering our stop 
to 23.40 but more conservative traders could use the 22.50 or 
23.00 as potential stops.  The next level of support should be 
$20.  However, if the healthcare does see a serious pullback HCR 
may aim for its bearish price objective of $16.00.

- Monday Update -

The action in the S&P Healthcare index (HCX.X) and the Drug
index (DRG.X) lead us to believe the failed rally today (as both
failed to close over their 200-dma yet again) is forecasting the
next move down will be soon.  The challenge is no one knows how
the markets will react to the FOMC decision on rate cuts tomorrow.
Thus we are lowering our stop to 22.55 on HCR which will help
protect a gain of 6.9% in this bearish play.  We're choosing it
as the Play-of-the-Day for Tuesday because a strong move down in
the HCX could lead HCR to support at $20.  If HCR trades to $20.05
intraday then we will be out of the play.  That means we're giving
up opportunity for it to breakdown below $20 but we can re-evaluate
a new entry at a later date.

Picked on October 26th at $24.23
Gain since picked:         +2.51
Earnings Date              10/26 (confirmed)






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

The PremierInvestor.net watch list is not designed to be read
as full fledged stock picks.  Rather we would prefer to offer
it as an extra tool in today's investor toolbox.  Think of it
as a radar screen with your own radar operator pointing out
interesting developments, technical patterns or potential plays
that you may or may not have seen on your own.  Due to time
constraints we do glance at the news but rarely do we have 
time to fully read pertinent news stories, due background 
research and other necessary screens that investors should do
before making a decision.  A common exercise is to read the
entry, glance at the sector and other stocks in that industry
and then compare what's happening in the stock to what's 
happening in the broader market indices.  We hope you enjoy
the Watch List and that it proves to be a useful tool for your
own trading success.

-----------

Merrill Lynch - MER - close: 48.68 change: +1.88

WHAT TO WATCH:  Volume for MER has been slowly climbing while the 
stock posted its third gain in a row.  Monday's trading marks a
confirmation of Friday's (2nd) breakout attempt above resistance
at $46.00.  Today's close put it above the previous high of $48 on
Oct. 26th.  Bulls and Bears will be watching the stock and how it
reacts to the $50 level which should be very tough resistance for
the stock.  A failed rally may see bears lean on it while a breakout
could have shorts running for cover and inspire bulls to jump on.
The Securities Broker/Dealer index (XBD.X) has been stuck in a 
trading range since mid-October and today's action set it right
below the upper channel of resistance at 460.  A breakout in the
sector could really fuel a move in select issues.




---

RenaissanceRe Holdings LTD - RNR - close: 103.70 change: +3.45

WHAT TO WATCH:  Given the current market environment there are 
probably not a lot of investors that look for $100 stocks to buy.
As this is just the watch list, we've not done an in-depth review
of RNR's internals but the stock really took off after the Sept.
11th attacks.  The surge from $70 to $100 only took a couple of 
weeks and since then the stock has been digesting its gains in 
range-bound fashion.  Now the stock has broken out above resistance
to a new high.  FYI: RNR is a property catastrophe reinsurer.  
RNR doesn't start paying until its customers' claims for a specific 
event exceed certain amounts.




---

Celgene Corp - CELG - close: 36.54 change: +1.96

WHAT TO WATCH:  We've been watching this biotech for days and on 
Friday the office team discussed the odds of the stock making a
breakout with $35 being tough resistance.  The point-and-figure
chart looks good and today's action should have shorts ready to
cover tomorrow.  If we get a dip to $35 that could be the entry
point to go long or look for shares to stay above 36.50 if you
want confirmation.  Upside target would be $40 to $42.25.  I would
consider a stop at 34.50 (10 cents under today's low).




---

Human Genome Sciencies - HGSI - close: 44.43 change: +2.24

WHAT TO WATCH:  With the biotechs enjoying today's rally, the 
bullish wedge on HGSI made another tight coil higher.  Readers
should be able to easily identify overhead resistance at $45.
This allows for a very clear trigger point.  If you like the 
sector consider this strategy (always adjust for your own 
needs)... We would put a trigger to go long if HGSI trades 45.10.
Once filled, place a stop at 43.45 which is just under the handle
formed in today's afternoon trading.  If shorts decide to cover
the stock could trade to $50 in a day or two. 




---

Gtech Holdings - GTK - close: 43.04 change: +1.90

WHAT TO WATCH:  Feeling lucky?  GTK makes lottery systems and it
appears the lottery business is good.  The stock recently broke
out above resistance at $40 to set new 52-week highs.  Even 
better, the stock's performance today put it above the old highs
formed back in January of 1998.  Volume has been stronger the
last couple of days which is a good sign for the bulls.  You'll
need to set your stop based on your time horizon.




---

Teekay Shipping - TK - close: 26.30 change: -1.29

WHAT TO WATCH:  With the price of oil dropping, the market is 
leaning on the oil equities.  One of them is TK, who provides
transportation services with the world's largest fleet of
medium sized oil tankers.  The stock is in a significant down 
trend and it's only getting worse as volume picks up.  The previous
three sessions saw the stock trying to hold on to the $27.50
level but today's drop to 26.30 came on big volume.  These are
levels not seen since April of 2000.  We would consider a short
with a stop just above 27.50 or 28.00 to limit exposure in any
oversold bounce.




---

Mercury Computer Sys - MRCY - close: 44.87 change: -1.95

WHAT TO WATCH:  This computer hardware stock is looking tired.  
Shares have rolled over at the $50 level and today's action was
fueled by negative comments from Prudential.  The close under
$45 may be the clue traders were looking for to vacate their
positions or add to bearish ones.  We think the stock could fall
to $40 but the point-and-figure chart shows a fresh sell signal
that could forecast a move down to $35.




---

Procter & Gamble - PG -close: 76.93 change: +0.93

WHAT TO WATCH:  We highlighted PG on the watch list last Wednesday
with notes the stock would probably trade up to overhead resistance
of $77 (to $77.50).  The whole sector of consumables have been very
strong lately and this level will really be a telling move on the
strength of the recent trend.  Odds are there will be some bears
trying to short it heavily but if the stock can breakout above 77.50
those same bears will likely cover.  Bulls will want the stock to 
close above this key level.  Keep your eyes on it.






=================================================================
To stop receiving this PremierInvestor.net Newsletter,
send email to Contact Support
=================================================================
DISCLAIMER
=================================================================

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

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

*****************************************************************
ADVERTISING INFORMATION

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

*****************************************************************


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



PremierInvestor.net Newsletter                  Monday 11-05-2001
                                                   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/5932_2.asp
=================================================================

In section two:

Net Bulls
  Closed Bullish Play:           VRTS
  New Bullish Stop Adjustments:  ADPT

Stock Bottom/Active Trader
  New Bullish Stop Adjustments:  CLX, HON
  New Bearish Stop Adjustments:  HCR, PPDI, (BMY - target notes)
  Closed Bearish Plays:  DME

High Risk/High Reward
  New Bullish Stop Adjustments:  HTCH


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) section
==================================================================

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

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

VERITAS Software - VRTS - close: 33.74 change: +2.78 stop: 27.75

Not again!  Last time we picked VRTS the next day it was up 
about 10.5% and then the Nasdaq handed us a three day losing
streak that stopped us out.  Now we're in the similar situation.
Do we take a gain even if we are short from our target of $35?
MSFT looks encouraging, the GSO software index looks encouraging.
VRTS could take off tomorrow.  Unfortunately, $35 is tough
resistance.  I tend to believe VRTS could consolidate for a 
few more days building more of a bullish wedge but that would
put a potential low at $29.00.  If you have a longer time horizon
for a bullish position on VRTS then don't be shaken out by 
reaction.  A close above $35 would probably have shorts running
but we don't want to see this gain turn into a loss.  We'll
keep an eye on a new entry short or long on VRTS as it tends to
be a mover.  

Picked on November 2nd at $30.96
Gain since picked:         +2.78
Earnings Date              10/16 (confirmed)





===========================
NB Bullish Stop Adjustments
===========================

Adaptec - ADPT - close: 13.85 change: +0.99 stop: 13.50 *new*

With ADPT up over 7% today we're going to put a fairly tight
stop on the play.  We're going to raise our stop to 13.50 which
will protect a 5% move.  If you have a longer term perspective
on the play consider a stop at just under $13 or maybe $12.50.
If ADPT trades to $15.00 intraday we're going to close the play.



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

===========================
AT Bullish Stop Adjustments
===========================

Clorox - CLX - close: 38.26 change: +0.25 stop: 36.85 *new*

We are moving our stop up below the $37 support level.  We would
expect CLX to potential traded back to $38 or $37.50 before 
moving higher.

---

Honeywell - HON - close: 31.98 change: +0.83 stop: 29.00 *new*

With the confirmation of a second day above the 50-dma we are 
raising our stop from 28.50 to 29.00 for HON.  If the stock
pulls back we would look for support at $31 and $30.


===========================
AT Bearish Stop Adjustments
===========================

Bristol Myers - BMY - close: 53.27 change: +0.23 stop: 54.60

This is not a new stop on BMY as 54.60 protects a nice gain
already in BMY.  However, we are confirming that if BMY trades
to $51.00 intraday we will close the play for a profit.  With
the action in the Drug Index today the next down move for
the sector could be soon.

---

Manor Care - HCR - close: 21.72 change: -0.23 stop: 22.55 *new*

The action in the S&P Healthcare index (HCX.X) and the Drug
index (DRG.X) lead us to believe the failed rally today (as both
failed to close over their 200-dma yet again) is forecasting the
next move down will be soon.  The challenge is no one knows how
the markets will react to the FOMC decision on rate cuts tomorrow.
Thus we are lowering our stop to 22.55 on HCR which will help
protect a gain of 6.9% in this bearish play.  We're choosing it
as the Play-of-the-Day for Tuesday because a strong move down in
the HCX could lead HCR to support at $20.  If HCR trades to $20.05
intraday then we will be out of the play.  That means we're giving
up opportunity for it to breakdown below $20 but we can re-evaluate
a new entry at a later date.

---

PPDI - close: 25.04 change: -0.96 stop: 27.25 *new*

We are lowering our stop 50 cents to 27.25.  Today's action 
confirmed the breakdown.  Could consolidate for a day or two
as bears try to force it below $25.


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

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

Dime Bancorp Inc - DME - close: 34.25 change: +1.35 stop: 34.05 

A broad-based rally across several sectors in Monday's trading 
was enough to send shares of DME up over 4% following the lead 
set by the S&P banking index (BIX).  The banking index turned in 
a powerful day with the sector trading right up to previous 
resistance at 595 set in late October.  A breakout above this 
level for the BIX could signal a new bullish trend for banks yet 
at this resistance level the market could see another round of 
selling as recent gains in banks consolidate with the index 
pulling back to 575.  For DME, we were stopped out a few minutes 
after 12 o'clock as the stock trade above the $34 level in a 
similar pattern to Washington Mutual.  Bulls shouldn't get too 
excited yet for DME as the stock still has resistance in the 
34.70 to 34.75 area.  This is in addition to the 200-dma just 
over $35.

Picked on November 1st at $32.69
Gain since picked:         -1.36
Earnings Date              10/15 (confirmed)







=================================================================
High Risk/High Reward (HR) section
==================================================================

===========================
HR Bullish Stop Adjustments
===========================

Hutchinson Tech. - HTCH - close: 21.22 chg: +1.67 stop: 18.75

With the move in the disk drive sector today we were triggered
in our long play at $20.10 for HTCH.  This bullish breakout 
came on exceptionally high volume for the stock.  We're adjusting
the stop from below $18 to $18.75.  Look for confirmation if
you're looking for a new position.  We could see a dip tomorrow.




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

MER     Merrill Lynch & Co         46.68     +1.88
AXA     Axa ADS                    23.65     +0.75
UNM     Unumprovident Corp         24.52     +1.11
PPL     PPL Corp                   36.00     +1.42
KCIN    Kpmg Consulting            13.70     +0.75

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

NTAP    Network Appliance Inc      17.00     +2.01
CNXT    Conexant Systems Inc       12.39     +1.20
VTSS    Vitesses Semiconductor     11.19     +1.30
MCDTA   McData                     17.30     +1.87
BGP     Borders Group Inc          16.41     +1.55

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

TBH     Telecom Brazil             30.29     +3.09
SEBL    Seibel Systems Inc         20.81     +3.52
MI      Marshall & Ilsley Corp     60.62     +1.57
PCAR    Paccar Inc                 59.00     +3.19
IDTI    Integrated Device Tech     32.48     +2.98

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

BAX     Baxter Intl                46.33     -2.67
APA     Apache Corp                49.05     -1.92
CYTC    Cytyc Corp                 23.81     -3.21
PIXR    Pixar                      34.95     -1.75
MRCY    Mercury Computer Sys       44.87     -1.95

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

none with enough volume to trade safely



=================================================================
To stop receiving this PremierInvestor.net Newsletter,
send email to Contact Support
=================================================================
DISCLAIMER
=================================================================

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

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

*****************************************************************
ADVERTISING INFORMATION

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

*****************************************************************


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.

Readers are urged to consult with their own independent financial advisors with respect to any investment. All information contained in this report and website should be independently verified.

To ensure you continue to receive email from Option Investor please add "support@optioninvestor.com"

Option Investor Inc
PO Box 630350
Littleton, CO 80163

E-Mail Format Newsletter Archives