Option Investor
Newsletter

Daily Newsletter, Wednesday, 11/07/2001

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PremierInvestor.net Newsletter              Wednesday 11-07-2001
                                                  section 1 of 2
Copyright  2001, All rights reserved.
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In section one:

Market Wrap:     Back to 50/50
Play-of-the-Day: Dialing for Dollars (bullish)
Watch List:      TSM, HAS, UIS, FLIR, OSIP, TEVA, BBY, ASIA, SBC,
                 RBAK, CTB, CMVT
Market Sentiment: Going Nowhere Fast

-----------------------------------------------------------------
U.S. Market Numbers
-----------------------------------------------------------------
MARKET WRAP  (view in courier font for table alignment)
-----------------------------------------------------------------
      11-07-2001          High     Low     Volume Advance/Decline
DJIA     9554.37 - 36.75  9644.12  9522.41 1.42 bln   1601/1526
NASDAQ   1837.53 +  2.45  1868.31  1820.28 2.04 bln   1669/1921
S&P 100   573.64 -  2.66   579.46   572.03   Totals   3270/3447
S&P 500  1115.80 -  3.06  1126.62  1112.98             
RUS 2000  440.80 -  1.98   444.66   440.64
DJ TRANS 2307.50 + 16.35  2309.64  2275.94
VIX        30.47 +  0.62    31.72    29.67 
VXN        57.20 -  0.11    59.95    48.28
TRIN        1.30 
Put/Call    0.48
-----------------------------------------------------------------

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

Back to 50/50

Maybe we should say "back to 15/15" but most know that 50/50 is 
almost break-even.  That's exactly how the nose of the aircraft 
is pointed as it relates to the Dow Industrials gainers/losers 
since their close on September 10th.  14 stocks in the Dow 30 are 
higher than their September 10th close, 1 stock is break-even and 
the other 15 are showing losses.  In essence, if our hypothetical 
Dow portfolio were any indication of direction, it looks like the 
recent climb is at a point where we'd expect to be leveling out.  

There are still some stocks in the tail end of the plane that are 
weighing on things and I would now be looking for some type of 
"sympathy rally" to take place at that end of the scale to tip 
the balance in favor of the bulls.  

If we're simply keeping score right now since September 10th, the 
score is Bulls 14, Bears 15 and undecided 1.  What's the "name" 
of that stock that the MARKET just can't make its mind up on?  
You guessed it!  General Electric (NYSE:GE)

Dow Industrials Hypothetical Portfolio from Sept. 10 close




The last time we visited our Dow Portfolio was at the close of 
trading October 26th.  Eight sessions later, the portfolio has 
gained just fractional and is now down 2.07% based on a $1,000 
investment in all stock at the close of trading September 10th 
(day prior to terrorist attacks).  

I don't think it is a coincidence that we're seeing General 
Electric (NYSE:GE) right at the #15 slot and break-even since 
September 10th close.  Last night we thought this might be the 
"swing stock" for the market if not the Dow Industrials and it 
sure looks like that's the case here.  If the stock can get above 
$40, then the that could push stocks higher.  Until that happens, 
I'm cautiously optimistic.

Intel (NASDAQ:INTC) is an interesting stock at current levels.  
The supply/demand charts say "be careful" if you're a bull.  I 
think there are going to be some aggressive bearish traders 
looking to short the stock in the not too distant future, but 
they too need to be careful.  Here's what I'm looking at that 
really has be "neutral" on the stock at this time, with a more 
near-term bearish outlook.

Intel Chart - $1 and $0.50 box 




Intel (NASDAQ:INTC) looks like it is in "no mans land."  If 
you're short, you'd better have a stop at $33 or just above that 
level as a trade there would be a spread-quintuple top buy signal 
and could have the stock unleashing a powerful move higher.  The 
recent trade at $25 was a quintuple bottom sell signal and you 
can see what type of climactic selling took place from there.

I'd add this stock to General Electric (NYSE:GE) as one to be 
keeping an eye on over the next several sessions and weeks for 
that matter.

Another Semiconductor stock to monitor

One of the reasons I have "mixed emotions" on a potential short 
trade in shares of Intel (NASDAQ:INTC) is what took place in 
shares of Micron Technology in the past two sessions.  "Hell hath 
no fury like big guns moving higher" in a sector.  

Micron Technology Chart - $1 and $0.50 box




Wow!  For a two-lettered stock, listed on the NYSE, this stock 
can move.  It's a semiconductor stock and it can be wild!  
Interesting to note how MU gave a very similar and alarming sell 
signal in September, just about the time Intel (NASDAQ:INTC) did.  
I'm telling you, there's something about "like stocks in like 
sectors" that usually plays out.  On Monday, Micron (MU) gave the 
"bullish triangle" pattern with a trade at $25.  That would have 
been a good action point for a bullish trade.  Today, the stock 
shot as high as $28.85 (+15% from $25), but closed near $25.90 as 
stocks just couldn't hold mid-session gains.

I've outlined in "?" (question marks) what traders and investors 
might look for going forward.  Shares of Micron mimicked that 
selling and also gave back some of today's gains.  Near-term I'd 
be look for a potential pullback near $24 as a potential bullish 
entry point and follow with a stop at $20, but preferably $19.75.

I'm thinking there were some shorts at one point today that were 
starting to sweat at $28 and will be willing to buy the pullback 
near $24.  Sometimes I'll miss a bullish triangle pattern on the 
"buy signal," but get a second chance on a pullback.  If bears 
look to cover near $24 and there are some bulls with conviction, 
look for a sharp reversal higher on 60-minute volume of 1.5 
million shares or more.  If market participants start playing 
"leap-frog" and rushing to buy the stock, we could see a sharp 
move higher to the $33 level, or close to it.

Now... if I'm going to try and short shares of Intel 
(NASDAQ:INTC) I want to be keeping an eye on Micron (MU) when 
short.  While both of these stocks got hammered in early 
September when they both broke "quintuple" bottoms, they can both 
get going higher if momentum players show up in droves!

What to look for near-term

Investors continue to gobble up bonds like crazy and drive YIELD 
lower.  This still has me somewhat cautious toward stocks as I 
just can't figure out why so much money continue to be attracted 
by such low YIELDS.  The 13-week YIELD dove to 1.76% today!  
Heck, that's a guaranteed loss considering inflation at 2%.

The market just looked a little tired in the final three hours of 
trading.  I was getting inundated with upside alerts on my trade 
station in the first couple of hours of trading, but very few of 
those stocks that actually gave the alerts held above those alert 
levels.

America Online (NYSE:AOL) "internet/media" is an example.  When 
the market burners looked to be kicking in, shares of AOL moved 
just above yesterday's high of $35.18 to $35.20, but quickly got 
turned back to close at its session low of $34.50.  It's almost 
as if the market was saying, "hold on big fellow, you're not 
ready to go just yet."

PeopleSoft (NASDAQ:PSFT) "software"  did something similar to 
AOL, but I'd rank PSFT as a much stronger stock that AOL.  PSFT 
finally hit that 50% retracement level of $34.31 today and 
actually traded as high as $35, giving a double-top buy signal on 
its point/figure chart.  Still with about three hours to go in 
trading, sellers came in and were able to push the stock back 
below the $34.31 level to close at $33.40.

I just get the feeling we're due for a rest.  How big of a rest 
is always a traders concern.

With that said, I really want to stress the point of moving up 
stops and trying to lock in profits when you hit a target.  

Hutchinson Technology (NASDAQ:HTCH) "disk drive" is an excellent 
example of this.  Last night, it would have been "unfair" for us 
to close out the trade (High Risk High Reward section) based on 
yesterday's close of $21.87 and lock in a gain of 8% from 
profile, especially after the company reported disappointing 
earnings after the bell. Instead, we simply raised our stop to 
$20.10 to make sure we didn't see an 8% gain turn into a loss.  
In my view, anytime I'm profitable by more that 7%, that trade is 
not going to turn into a loss!  

Hutchinson Technology Chart - 




Momentum players most likely dumped the stock this morning after 
the company's miss on earnings.  Don't take your eye completely 
off this stock just yet and keep an eye on the Disk Drive Index 
(DDX.X).  There's some type of dynamic taking place in this 
group.  What is this stock doing trading near a 52-week high 
while earnings are so poor?  Could it be that a new bullish cycle 
is occurring in the sector?  Something is going on and we need to 
keep an eye on things.

A good lesson here is to raise your stops to break-even in a 
trade when you get a nice gain going, especially if you've hit a 
near-term bullish target.  It's bad enough seeing 8% gains 
evaporate and it doesn't help if the stock ends up triggering 
your stop for a loss in the trade.  

To be truthful, a momentum trader or short-term trader that had 
bought this stock at $20.10 and found the stock opening for 
trading at $21 (5% gain) with bad news in the stock, should have 
dumped this thing like a hot potato.  

Isn't it interesting how the stock pulled back to close right at 
our "break out" level of $20.10.  Like I said... "something's up" 
and we'll want to keep an eye on things.

Final Note:

Adaptec, Inc. (NASDAQ:ADPT) "disk drive" is also in our bullish 
play list.  Right now, traders in that stock have a nice gain 
going.  I'm a bit surprised that Hutchinson's (HTCH) "bad news" 
didn't impact this stock to the downside today.  Regardless, I'm 
a big believer that when there's "bad news" in the sector, I sure 
as heck don't want to bury my head in the sand and pretend 
everything is OK.

At PremierInvestor.net, we try and run our "Play List" like we 
own $5,000 in every position profiled.  We try and manage "the 
account" first, then each specific stock.  What this allows us to 
do is profile both long and short plays based on account 
management.

As you can see, we've got some plays where we're starting to get 
some nice percentage gains.  I agree, $1.37 gain on Adaptec 
(ADPT) doesn't seem like much, but it's a 10% gain on a $5,000.  
To an institution, it could be a 10% gain on $5 million.

For you, you may only be positioned in two of the stocks in the 
portfolio.  Our stopping points and "reason" for placing a stop 
at a particular level is sometimes "too much room" or "not enough 
room" for you.

In brief, we try and manage each trade so that all subscribers 
get a feel for what we're trying to do.  If you get a 5% gain and 
want to take it, please do.  That's fantastic and you're making 
money and benefiting from your subscription.

Please trade your account as you see fit.  We will never say "I 
told you not to set your stop too tight and take a profit as we 
knew the stock was going higher."  Anytime you feel you need or 
should be taking a profit, do so.  That's what investing/trading 
is all about!

"Getting out too soon can be frustrating, but getting out to late 
can be costly."

Jeff Bailey
Senior Market Technician



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

Allegiance Telecom - ALGX - close: 8.62 chg: +0.32 stop: 7.90

Company Description:
Allegiance Telecom is a facilities-based CLEC based in Dallas, 
Texas. Allegiance Telecom offers businesses a complete package of 
telecommunications services, including local, long distance, 
international calling, high-speed data transmission and Internet 
services. Allegiance is targeting a total of 36 major 
metropolitan areas in the U.S. with its "one-stop shopping"
approach.  (source: company press release)

Why We Like It:
ALGX is a telecom stock making a comeback.  The Monday opening 
after the September terrorist attacks was crucial for ALGX (like 
so many other stocks) but this telecom stock broke below key 
support at $10.  The down trend picked up steam with the market's 
terrible decline that week but on the 26th of September shares of 
ALGX were hammered for a 30% loss.  Management had told analysts 
that the 9-11 attack would lower revenues by 5% but they expected 
earnings to be on track.  Shares continue to get pummeled before 
finding a bottom near $3.  The company maintained their guidance 
that the 2nd half of 2002 they would be breakeven.  Since then 
ALGX has announced earnings on Oct. 23rd and the stock has been 
in a bullish climb since.  Today's close was the third 
consecutive day higher after closing above its 50-dma and the 
stock appears to be using the $8.00 level as new support.  Some 
traders will see today's close at 8.62 as important as it 
surpasses the April 2001 lows.  We're looking for a short-term 
move up to $10 while longer-term players can aim for $12 but 
there is a lot of congestion once the stock passes $10.  We're 
going to initiate the play with a tight stop at $7.85, which is 
just under today's lows.  Traders who like to move in on 
confirmation can wait for the stock to trade above the $8.80 
level (or $9.00 if you really want confirmation).  Those with a 
longer time horizon may want to widen their stop closer to $7.50 
or lower.  FYI: if ALGX trades to $10.00 intraday we will close 
it for a profit.

Picked on November 7th at $ 8.62
Gain since picked:         +0.00
Earnings Date              10/23 (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.

----------


Taiwan Semiconductor - TSM - close: 14.50 change: +0.30

WHAT TO WATCH:  The chip sector has been very strong and a leader 
in the recent market rally.  While the SOX closed relatively 
unchanged today, shares of TSM added another 2% and confirmed the
recent breakout above the 200-dma.  Volume has been rising the
last three days and the stock looks like it could easily trade
to overhead resistance at $16.  Longer-term targets could be placed
near $19.00.  




---

Hasbro Inc - HAS - close: 18.17 change: +0.24

WHAT TO WATCH:  Hasbro, the Rhode Island-based toy maker, has been
very strong the last several days.  We've been watching the toy 
manufacturers and distributors for two reasons.  No 1, if analyst
believe this holiday shopping season could be okay then HAS will
certainly benefit but more so due to reason number 2.  No 2, with
the new "cocooning" effect taking place in American family life
consumers will be buying products to spend on their kids or things
they can do together as a family.  HAS is one of the companies that
should benefit from this new focus.  Our only concerns with HAS are
its sector mates like MAT and TOY who look weaker and could weigh
the group down.




---

Unisys Corp - UIS - close: 10.14 change: +0.04

WHAT TO WATCH:  This computer services and software company has
broken out above its recent trading range and above resistance
at $9.50.  Now the stock has bullishly closed above the $10 level
and we think shares could trade to $12 given enough time.  Keep
an eye on potential resistance at $10.70 and $11.00.  Conservative
traders might be able to squeak by with a tight stop at $9.65 or
under $9.50.




---

FLIR Systems - FLIR - close: 47.20 change: +1.45

WHAT TO WATCH:  This thermal imaging and camera systems company is
probably known more as a defense contractor.  As the U.S. Defense
systems get more high tech FLIR is sure to see more contracts.  The
stock has been a huge winner for investors over 2001 when it took
off at the $5 level back in mid-February and is now consolidating
near $45.  The late-September surge fueled by the terrorist attacks
has been consolidating between $40 and $45 and Wednesday close just
barely puts it above the recent highs.  We think the stock looks
like it could take off from here with the last five days building
support at the $44/$45 level.  Confirm the move!




---

OSI Pharmaceuticals - OSIP - close: 47.42 change: +1.44

WHAT TO WATCH: Shares of OSIP may start to take a leadership 
position in the drug sector.  The stock has seen a very strong
run from its late September lows and the last two weeks saw
it consolidating sideways in a pennant formation centered around
its 200-dma.  Tuesday saw shares breakout to the upside from this
pennant and today's move is confirmation.  OSIP is liable to see
round number price resistance at $50 but we would target $55 on
the upside.  




---

Teva Pharmaceutical - TEVA - close: 60.24 change: -1.66

WHAT TO WATCH:  Looking quite the opposite of OSIP above, this
drug company can't seem to catch a bid.  The stock topped out
mid-October and after falling below the 50-dma, the moving 
average has been very tough resistance as the stock rolled over
the rest of the month.  Halloween was frightful for shareholders
as the stock fell to its 200-dma.  The last four days have shown
bulls trying to buoy the stock but bears put a lid on it at 
$62.50.  Today's technical breakdown below its 200-dma does not
bode well for the rest of the month.




---

Best Buy Co Inc - BBY - close: 61.05 change: +0.30

WHAT TO WATCH:  The same cocooning effect that could benefit 
Hasbro could also benefit BBY.  Adults are likely to purchase
more in-home entertainment equipment and a popular place to
get it is BBY.  On top of hopes for a good holiday shopping 
season, BBY might be able to trade to $69 if it can clear 
resistance at $62.  




---

AsiaInfo Holdings - ASIA - close: 14.25 change: -0.66

WHAT TO WATCH:  ASIA is a strong candidate for our high risk/
high reward section of the newsletter.  The stock recently
broke out strongly above severe price resistance at $14 and 
its 200-dma.  Today saw some profit-taking.  We would look for
a bounce at $14 with immediate resistance at $15 and $16.  
Long-term upside target would be $20.  Consider an initial
stop under $14.




---

SBC Communications - SBC - close: 38.04 change: -0.25

WHAT TO WATCH:  One of the laggard components in the Dow Jones
Industrials, SBC has been consistently trading lower for the 
last four days.  We think the stock looks like a great short play
if shares trade below the late October low of $37.75.  The
point-and-figure chart shows the stock under price support of
$39 and on a fresh new low.  Bearish price objective is currently
$28 but it could go lower.  We would only consider once the 
breakdown occurred as the MACD is starting to converge.




---

Redback Networks Inc - RBAK - close: 4.27 change: +0.07

WHAT TO WATCH: This networking stock has been consolidating 
sideways with a bullish trend higher since its recent high
near $4.00 back in mid-October.  The stock has climbed higher
since then but strong resistance exists at $4.50.  A break
above this could easily portend a rush to $5.00 (a 10% move).
The point-and-figure chart shows the stock on a fresh buy 
signal.  Would consider a tight stop near its 10-dma to start.




---

Cooper Tire Rubber - CTB - close: 14.18 change: +0.36

WHAT TO WATCH:  After topping out just north of $17 in August the
stock plummeted to $12.50 by mid-September.  Since then shares of 
CTB have been consolidating very nicely the last six weeks and 
lows have been climbing.  We think shares of CTB could explode 
higher if the bulls can breakthrough very significant resistance 
at $14.25 and its 50-dma (14.27).  The stock could consolidate for 
a few more days but our instinct makes us think the breakout 
happens soon (just be careful the breakout isn't down).  The 
pattern does have a bullish bias but shares could go either way.




---

Comverse Technology - CMVT - close: 20.64 change: +0.40

WHAT TO WATCH:  A previous favorite of tech stock trading, CMVT
may appear to be lagging behind the strong moves in the Nasdaq
but the stock has rebounded over 33% from its mid-October low
of $15.  The last three days show the stock building on new
support at $20.  It looks like the bulls are preparing to mount
an attack on price resistance at $21 and the 50-dma at 21.35.
First price hurdle from there is $23.  The stock is extremely
oversold on a long-term basis and could appreciate quickly if
buyers could find a reason to own the stock again.  






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

Going Nowhere Fast
by Russ Moore

Walking up an escalator going down is the quickest way to go 
nowhere. Both sides took their shot at moving the markets, but in 
the end, neither side was able to claim victory as the markets 
ended an extremely choppy session with only fractional 
gains/losses.

The DOW poked it’s head above the flat-line on several occasions 
but failed to gain any momentum, closing with a loss of -0.4 
percent. The NASDAQ and NDX were in positive territory for much 
of the day, slipping somewhat into the close, and ending with a 
gain of +0.1 percent for both indexes. 

Volume was up substantially with the NYSE trading 1.69 billion 
shares and the NASDAQ trading 2.04 billion shares. Market breadth 
had winners nosing out losers by a 16/15 count on the big board, 
while losers edged winners by a margin of 18/17 on the NASDAQ.

Gold, financials, oil service, and transports were all in the 
green while utilities, insurance, drugs, biotechs and retailers 
were seeing red. Software and Internet stocks added to their 
recent gains while networkers, chips, and hardware stocks were 
weak.

Economic news was mixed as third quarter production rose +2.7 
percent versus the +2.0 percent forecast. September wholesale 
inventories fell -0.1 percent while wholesale sales slipped -1.3 
percent.

Asset reallocation continues to be the name of the game as 
managers shift assets from bonds into equities. In addition, a 
large number of institutional market players have been fooled of 
late. The markets, based on the dismal economic data, and the 
recent rally are supposed be headed for a near-term pullback. The 
market’s performance over the last week has left many of these 
players with no choice but to cover their shorts. Let’s not 
confuse recent action with overly bullish sentiment.


VIX 
Wednesday 11/07 close: 30.47


VXN
Wednesday 11/07 close: 57.20


30-yr Bonds
Wednesday 11/07 close: 4.80


Total Put/Call Ratio: .69


Equity Option Put/Call Ratio: .62


Index Option Put/Call Ratio:  1.27


===

NASDAQ 100 Index (NDX/QQQ)
52-Week High: 103.51
52-Week Low:   28.19
Current close: 38.14

Volume/Open Interest
Maximum calls: 35/71,274
Maximum puts : 33/99,435

Moving Averages
 10 DMA 35
 20 DMA 35
 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: 573.64

Volume/Open Interest
Maximum calls: 560/5,506
Maximum puts : 500/9,410

Moving Averages
 10 DMA  561
 20 DMA  559
 50 DMA  554
200 DMA  616

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: 1115.80

Volume / Open Interest
Maximum calls: 1075/18,985
Maximum puts :  950/22,056

Moving Averages
 10 DMA 1091
 20 DMA 1088
 50 DMA 1080
200 DMA 1196

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:  9,554.37

Volume / Open Interest
Maximum Calls: 94/24,899
Maximum Puts   92/19,540

Moving Averages:
 10 DMA  9,364
 20 DMA  9,339
 50 DMA  9,322
200 DMA 10,236

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: 582.74

Volume / Open Interest
Maximum Calls: 580/  525
Maximum Puts:  420/1,576

Moving Averages
 10 DMA 563
 20 DMA 534
 50 DMA 502
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: 519.36

Volume / Open Interest
Maximum Calls: 570/ 509
Maximum Puts:  420/ 774

Moving Averages
 10 DMA 480
 20 DMA 464
 50 DMA 462
200 DMA 575

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: 396.36

Volume / Open Interest
Maximum Calls: 420/ 282
Maximum Puts:  400/1000

Moving Averages
 10 DMA 392
 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.




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

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

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



PremierInvestor.net Newsletter               Wednesday 11-07-2001
                                                   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/3125_2.asp
=================================================================

In section two:

Net Bulls
  New Bullish Plays: ALGX and LGTO

High Risk/Reward
  Closed Bullish Play: 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 New Plays
============

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

Allegiance Telecom - ALGX - close: 8.62 chg: +0.32 stop: 7.90

Company Description:
Allegiance Telecom is a facilities-based CLEC based in Dallas, 
Texas. Allegiance Telecom offers businesses a complete package of 
telecommunications services, including local, long distance, 
international calling, high-speed data transmission and Internet 
services. Allegiance is targeting a total of 36 major 
metropolitan areas in the U.S. with its "one-stop shopping"
approach.  (source: company press release)

Why We Like It:
ALGX is a telecom stock making a comeback.  The Monday opening 
after the September terrorist attacks was crucial for ALGX (like 
so many other stocks) but this telecom stock broke below key 
support at $10.  The down trend picked up steam with the market's 
terrible decline that week but on the 26th of September shares of 
ALGX were hammered for a 30% loss.  Management had told analysts 
that the 9-11 attack would lower revenues by 5% but they expected 
earnings to be on track.  Shares continue to get pummeled before 
finding a bottom near $3.  The company maintained their guidance 
that the 2nd half of 2002 they would be breakeven.  Since then 
ALGX has announced earnings on Oct. 23rd and the stock has been 
in a bullish climb since.  Today's close was the third 
consecutive day higher after closing above its 50-dma and the 
stock appears to be using the $8.00 level as new support.  Some 
traders will see today's close at 8.62 as important as it 
surpasses the April 2001 lows.  We're looking for a short-term 
move up to $10 while longer-term players can aim for $12 but 
there is a lot of congestion once the stock passes $10.  We're 
going to initiate the play with a tight stop at $7.85, which is 
just under today's lows.  Traders who like to move in on 
confirmation can wait for the stock to trade above the $8.80 
level (or $9.00 if you really want confirmation).  Those with a 
longer time horizon may want to widen their stop closer to $7.50 
or lower.  FYI: if ALGX trades to $10.00 intraday we will close 
it for a profit.

Picked on November 7th at $ 8.62
Gain since picked:         +0.00
Earnings Date              10/23 (confirmed)




---


Legato Systems - LGTO - close: 9.89 change: -0.15 stop: 8.99

Company Description:
Legato Systems, Inc. the award winning software innovator, 
specializes in providing its customers with a seamless approach 
for protecting, moving and making available business-critical 
company information. Legato pioneered the industry standard for 
storage management software products. More than 10,000 customers, 
including Fortune 1000 companies, are utilizing more than 65,000 
Legato software product licenses worldwide. Headquartered in 
Mountain View, CA, USA, Legato has an established global presence 
with offices in 23 countries to fully serve its customers.   
(source: company press release)

Why We Like It:
We like LGTO because it is a technology stock that doesn't look 
too overbought while still looking bullish.  The stock has decent 
upside potential with clear levels of support to set stops.  The 
stock had been in a long decline from mid-summer that culminated 
in a drop to $4.60 in the September sell-off.  Since that time 
the stock had doubled to the $9.50 level in a month.  The two-
week pullback and consolidation in late October is exactly what 
the stock needed to digest its gains and prepare for the next leg 
up.  Now shares have spent two days over the mid-October high and 
are mounting an assault on price resistance at $10.00.  We are 
going to set an entry trigger for the newsletter at $10.10.  If 
LGTO trades $10.10 then we're "in".  Once that occurs our initial 
stop will be $8.99, which is just below Tuesday's low.  The night 
after we're triggered we'll adjust our stop to reduce exposure.  
More conservative traders might be able to get away with a stop 
under $9.50 but you'll need to consider LGTO's trading action and 
market strength.  There should be some resistance at $11 but our 
short-term target is $12.00.  The $12.00 is both round number 
price resistance and currently the resting-place of the 200-dma.  
One analyst in the office believes LGTO can trade up to $14 but 
that could take a month or two.  The point-and-figure chart shows 
a long-term bullish price objective of $20.00.  The pnf chart 
also shows that LGTO is on a fresh buy signal so we expect a move 
soon.  On the fundamental side, recent agreements with Fujitsu 
and IBM should really help boost sales as LGTO products see more 
distribution to end users.  

Picked on November Xth at $10.10 -- waiting to be triggered
Gain since picked:         +0.00
Earnings Date              10/23 (confirmed)






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

===============
HR Closed Plays
===============

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

Hutchinson Tech. - HTCH - close: 20.09 change: -1.78 stop: 20.10

Our initial launch into the high risk/high reward section of the 
website was off to a good start.  HTCH took off on Monday 
triggering our entry at 20.10 before closing with a strong gain 
at 21.22.  The next day shares traded higher but a disappointing 
earnings report soured investor outlook and Wednesday was 
disappointing even though we expected a pullback.  The stock lost 
over 8 percent on very strong volume as short-term momentum 
trader took gains and longer-term investors reconsidered whether 
they wanted keep their shares in this disk drive company.  
Speaking of disk drives, the disk drive index (DDX.X) was only 
fractionally lower with the three day top at 92.65 holding as 
strong as the three-day support at 90.00.  Traders should notice 
that the DDX has been in an incredibly strong up trend since last 
month and the occasional pause or dip only lasted a day or two.  
If the up trend is to continue for this sector look for another 
day or two before the shares move higher.  If the DDX breaks down 
below its 200-dma again then traders may see that as the end of 
the bull run.  Looking back at HTCH, previous resistance at $20 
could turn into new support but tomorrow will be a crucial test.  
The newsletter opened the play at 20.10 and closed the play at 
20.10, which is unfortunate since the stock was near a 9% gain at 
Tuesday's close.  

Picked on November 5th at $20.10 
Gain since picked:         +0.00
Earnings Date              11/06 (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 

BAC     Bank of America            62.75     +0.64
LEH     Lehman Brothers            67.25     +1.90
CVC     Cablevision Systems        35.95     +1.00
CEG     Constellation Energy       24.89     +0.52
ACF     Americredit Corp           18.40     +2.30

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

SCH     Charles Schwab             15.35     +1.05
CIEN    Ciena Corp                 17.40     +1.16
EXLT    Exult Inc                  15.95     +1.23
SSTI    Silicon Storage Tech       12.35     +1.24
MANU    Manugistics Group          10.56     +1.49

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

TEF     Telefonica Sa              38.88     +1.23
TBH     Telecom Brazil Sa          34.00     +1.60
IGT     Internat Game Technology   59.50     +4.25
MYGN    Myriad Genetics Inc        51.28     +3.28
MACR    Macromedia Inc             20.13     +2.08

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

CAH     Cardinal Health Inc        63.90     -1.60
CA      Computer Associates        28.99     -1.41
AOC     Aon Corp                   35.95     -4.21
ESRX    Express Scripts Inc        39.65     -3.45
DIGE    Digene Corp                31.91     -3.02

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

UTSI    Utstarcom Inc              22.25     -1.05
SKIL    Skillsoft Corp.            21.20     -3.51
BIO-A   Bio-Rad Labs Inc           61.00     -2.25




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

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

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




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