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Daily Newsletter, Wednesday, 11/14/2001

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PremierInvestor.net Newsletter              Wednesday 11-14-2001
                                                  section 1 of 2
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In section one:

Market Wrap:     Bond market sees selling
Play-of-the-Day: Comfortable With Estimates
Watch List:      SRCL, NEOG, NTOP, SEE, EMLX, PII, TRDO, QLGC
Market Sentiment: Retail sales drive markets higher

-----------------------------------------------------------------
U.S. Market Numbers
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MARKET WRAP  (view in courier font for table alignment)
-----------------------------------------------------------------
      11-14-2001          High     Low     Volume Advance/Decline
DJIA     9823.61 + 72.66  9859.38  9741.41 1.43 bln   1880/1229
NASDAQ   1903.19 + 11.08  1922.45  1875.27 2.14 bln   2060/1538
S&P 100   589.16 +  2.12   592.44   584.56   Totals   3940/2767
S&P 500  1141.21 +  2.12  1148.28  1132.87
RUS 2000  452.82 +  4.48   452.82   448.29
DJ TRANS 2392.97 + 51.35  2395.84  2339.23
VIX        28.60 +  0.02    30.11    28.00
VXN        56.38 +  0.44    58.48    55.85
TRIN        0.88
Put/Call    0.53
-----------------------------------------------------------------

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

Bond market sees selling

Tomorrow could be a BIG day for traders to be monitoring near-
term.  Last night I got an e-mail from a private research firm 
talking about liquidity concerns from mutual fund flows and 
hinting that stocks may have reached their near-term peak based 
on the laws of supply/demand.  Supply being stocks and demand 
being cash.

However, that liquidity alert didn't say anything about the bond 
market.  Just as pork is "the other white meat" to chicken, the 
bond market is "the other market" as it relates to the stock 
market.  I might argue that if there is a problem with liquidity 
(cash) to drive stocks higher, perhaps today's action in the bond 
market was one way the MARKET answered the liquidity concern.

10-year YIELD Chart - 




Liquidity can come from multiple places.  One place is from 
investors pumping cash from their savings accounts into stock 
equity funds or stocks themselves.  Liquidity can also come from 
the bond market, where cash is generated from the sale of bonds.  
Today's action in the bond market shows a sharp rise in YIELD 
(caused by selling in bonds).  

Now we look back at similar technicals dating back to this spring 
and March 27th.  There too we witnessed a sharp rise in bond 
YIELD right up to a downward trend.  Notice how parallel that 
downward trend on the left side of the chart is, to the downward 
trend we're currently monitoring.  Also note how close in 
proximity the 50-day MA is today, just as it was back on March 
27th.  Also not how MACD is rounding higher below the zero level, 
just as it was back on March 27th.  Coincidence?  Or is it 
something we should be monitoring near-term to get a feel for how 
things trade going forward?  I'm going to monitor it, but also 
understand what took place back on the various dates I've 
highlighted on the above YIELD chart.  I need to get a feel for 
what "liquidity."  What did it do in the past and what might it 
do in the future?

NASDAQ-Composite Chart -




First things first.  The NASDAQ closed at 1,903 today.  This is 
about 141 points shy of our 19.1% retracement level of 2,044 and 
about 121 above our first level of retracement support at 1,781.  
I will also make note of how our "fitted retracement" sure acted 
like support Monday morning, just after the plane crash in New 
York.  Now we have a good feel that any bullish/bearish trades 
initiated tomorrow as it relates to the NASDAQ Composite is about 
a 50/50 risk/reward from tonight's close and current levels of 
retracement.

For this reason I think it become quite important to be watching 
bond YIELD near-term.  Let's review the timeline of the 10-year 
YIELD chart ($TNX.X) with that of the NASDAQ Composite (COMPX) 
above.

In late March, the NASDAQ was under extreme selling pressure.  
The economy was in the tank and going nowhere fast. On March 
27th, the 10-year YIELD jumped right up to downward trend.  That 
day, the NASDAQ composite traded higher by 70 points, or 3.6% as 
the 10-year bond YIELD had just turned sharply higher and ran 
into downward trend.  Bond YIELD then traded sideways to 
fractionally lower (bond prices saw fractional gains) for 9 
sessions.

On April 4th, the NASDAQ achieved a relative low of 1,619 on the 
above chart, then reversed higher on April 5th.  During this 
time, the 10-year YIELD was still hovering right near its 
downward trend and just under its 50-day moving average.

Then on April 6th, the 10-year YIELD looked to be breaking lower 
and having trouble at downward trend.

On April 10th, the 10-year YIELD did an about face and jolted 
higher, breaking above downward YIELD trend.  On April 10th, the 
NASDAQ Composite jumped a remarkable 107 points, or 6% and the 
spring rally of 2000 was underway.

For the next couple of weeks, bonds continued to unwind as 
sellers came to that portion of the market and turned the cash 
from the sale of bonds toward the stock market.  On May 18th, the 
10-year YIELD reached its peak (nobody knew it was the peak at 
the time) and the NASDAQ had risen a remarkable 453 points (2198-
1745) from its April 9th close to finish the May 18th trading 
session at 2,198.

Two trading sessions later, the NASDAQ composite added an 
additional 115 points of upside to close at 2,313, as money began 
rotating back into the higher YIELD and safety of bonds.  From 
there, the NASDAQ composite fell an astounding 890 points over 
the next several months until reaching the recent relative low on 
September 21st and closing at 1,423.  

Suffice it to say.  Stock traders need to be watching bond YIELDS 
very close near-term.  

On November 2nd, in my Market Wrap, "Vinegar and Baking Soda 
Mixed" I outlines almost exactly what has now come to a head.  I 
would recommend we reread that commentary.

I said we'd have fun and we'd make money.  If we watch bond 
YIELDS closely, we now have an idea what to look for based on 
past history. I think there's more fun ahead.  So much depends on 
bond YIELDS near-term.

I do not contest concerns regarding liquidity based on mutual 
fund inflow/outflows, but the bond market is a more meaningful 
measure of true market liquidity.

It's my belief that the bond market is much smarter than the 
stock market.  It has to be!  The reason for this is that the 
best rate of YIELD you can currently get from the Treasury market 
right now is in the 30-year YIELD at 5.02%.  You'd better be so 
smart and knowledgeable to invest in that 5.02%.  After all, 
5.02% is not that much of an income per year.

Now you know why a stock investor should be quite happy with a 5% 
gain in a stock trade after just two-weeks of investing.  Let 
alone the gain subscribers have going in our "High Risk/High 
Return" profiled trade in shares of F5 Networks (NASDAQ:FFIV) 
from the $19.19 level.  At today's close, that's a hefty 20% gain 
in just 3-days!  We want to protect those gains with a tight 
stop, just in case it takes awhile for YIELDS to get through that 
downward trend.


Jeff Bailey
Senior Market Technician


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

CIENA Corp. - CIEN - close: 18.77 change: +0.34 stop: 17.74

Company Description:
CIENA Corporation's market-leading optical networking systems 
form the core for the new era of networks and services worldwide. 
CIENA's LightWorks(TM) architecture enables next-generation 
optical services and changes the fundamental economics of 
service-provider networks by simplifying the network and reducing 
the cost to operate it. (source: company press release)

Why We Like It:
The fiber optics industry has been a huge loser for the market 
and investors for months.  It's painful just to look at previous 
high flyers like JDSU, NT, GLW, even CIEN.  However, if there is 
a play in this sector CIEN might be one to watch.  The company 
just recently announced earnings and management had a lot of good 
things to say.  CIEN is in a healthy condition with $1.6B in 
revenues and close to $1.7B of cash on hand.  Management feels 
confident that they will meet Wall Street's estimates for the 
fourth quarter in spite of the overall slowdown in the sector.  
The company plans to triple its share of the networking equipment 
market.  Management also told analysts and shareholders that they 
would be cutting about 10 percent of its work force.  

So why would we choose CIEN over the likes of JDSU and GLW who 
posted stronger gains today?  We like CIEN because the current 
share price allows us to limit our risk.  The obvious risk is the 
current bull rally in the Nasdaq ends and we see several days of 
consolidation.  If this comes true then nearly any previous high-
flyer we trade will probably see substantial pullbacks.  If this 
occurs we want to be out quick.  A quick look at CIEN shows the 
stock has been consolidating near support of $18 for the last day 
and a half.  There was a decent late day surge in share price but 
we can still start the play with a stop at $17.74 which will put 
our risk just over 5%.  The first hurdle for the bulls is 
overhead resistance at $20.  If this was our goal then we'd use a 
much tighter stop or not play at all.  Our goal is higher at 
$21.95.  The point-and-figure chart has a bullish price objective 
of $26 but we know $22 is tough resistance from the run that 
occurred in late October.  We decided to check the relative 
strength p-n-f chart for CIEN and found it to be in a column of 
X's against the S&P 500.  This is interpreted as a bullish signal 
for investors.  

There are multiple ways to play CIEN but we don't feel this is a 
trade for everyone.  Aggressive traders may want to look for dips 
back to $18.00 or $18.25 while others can look for the breakout 
above $20.  If you choose the later you should consider using a 
tighter stop.  This is one play where we will quickly adjust 
stops higher once the P/L is strongly positive.

Picked on November 14th at $18.77 
Gain since picked:          +0.00
Earnings Date               12/13 (not 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.

----------


Stericycle, Inc - SRCL - close: 54.10 change: +0.73

WHAT TO WATCH:  This regulated medical waste management company
has just closed at a new 52-week high.  The stock had been stuck
under the $52.50 level for most of the year.  Last week saw some
volatility but shares have quickly rebounded posting four positive
days in a row.  The MACD is picking up again and the stock may
have more room to run.  Watch for shares to breakthrough the $55
mark.  It may seem some consolidation above its old resistance of
$52.50.  




---

Neogen Corp - NEOG - close: 20.51 change: -1.64

WHAT TO WATCH:  This stock was a real screamer from late October
to early November when shares ran from $16 to a high near $25.
It now appears that bears have a grip of the stock and shares 
have produced two down days in a row when the rest of the market
is soaring.  The MACD just produced a bearish crossover and 
the price just dropped below its 15-dma.  We would watch for shares
to fall under $20, which should be price support.  Once under
$20, NEOG could pull back to $18 (10% drop from $20) or even $16.




---

Net2Phone - NTOP - close: 6.000 change: -0.04

WHAT TO WATCH:  A very interesting chart on this one.  Shares
rocketed up from the $3.00 level back in mid-October to heavy
resistance at $6.00 the first week of November.  From the looks
of it NTOP is purely a momentum play.  What surprises us was the
slow drift from $6.00 to $5.15 from Nov. 5th to Nov. 9th.  It
eventually re-tested $5.00 but the big day in the Nasdaq on 
Tuesday sent the stock flying back to overhead resistance.  
Coincidentally, the pullback to support took off again at the
15-dma.  We would encourage you to do some more research on the
company but aggressive players may be able to catch a rally up
to its 200-dma at 6.80 or price resistance at 7.00.




---

Sealed Air - SEE - close: 44.40 change: +0.55 

WHAT TO WATCH:  Readers should be familiar with the recent
winner we had in Bemis, the packaging company.  SEE is also 
a packaging company and we see a similar trend.  Shares appear
to move a bit slower but we have a strong bullish trend in place.
The last five days have identified resistance at $44.50 but the
stock also has resistance at 44.75 to 44.80 set back in mid-May.
Watch for shares to trade over $45.  This could be a potential
trigger to go long.




---

Emulex Corp - EMLX - close: 26.74 change: -1.76

WHAT TO WATCH:  EMLX is another networking stock worth watching.
Shares produced an extremely strong rebound during the month of
October but the trend has started to flatten out some as the
stock trades range bound between $30 and $25.  We would watch for
an upside breakout over $30 and its 200-dma at 30.50 to go long.
We would also watch for a downside breakout under $25 to consider
a short play.  Either one ought to be good for at least a 10% 
move if not more.  Aggressive bulls should take note that last
time shares traded down to its 15-dma was late October/early 
November and the stock retraced to this level again on Wednesday.
If you're really nimble you might be able to scalp the move from
$27 to $30 on its next rotation higher.




---

Polaris Industries - PII - close: 52.72 change: +1.86

WHAT TO WATCH:  Anyone who lives near any sort of mountain range
or woodland has probably seen part of the Polaris product line.
They are famous for their snowmobiles but they also make ATVs
and other recreational vehicles.  The stock just signaled a 
quadruple top breakout on its point-and-figure chart in addition
to a strong price breakout over resistance at $51-$52.  Volume
was strong today and the MACD is turning up again.  Definitely
a stock worth watching.




---

Intrado Inc - TRDO - close: 24.95 change: -1.79

WHAT TO WATCH:  Intrado is a provider of 911 support systems.
The stock had seen a nice climb from $15 in early July to 
over $35 in mid-October.  Looks like investors are taking some
money off the table.  The recent failed rally at $30 sparked
a huge sell-off and shares have collapsed under support at $26.
The fact that is closed under $25 is another bearish clue.
Wednesday's drop was also accompanied with huge volume.  We
would anticipate a fall to $22.50 or even $20 with the current
technicals.




---

Qlogic Corp - QLGC - close: 47.30 change: -0.79

WHAT TO WATCH:  The semiconductors have definitely been leaders
in this tech rally but if you've been reading the daily 
commentary by Jeff we're not sure how much higher the group
can climb without some consolidation first.  Shares of QLGC 
have been fighting with resistance at $50 for days but the
stock has been finding higher lows and is forming a bullish
pattern under this top.  The 10-dma has been the rally point
for bulls to step in and buy the dip.  At this point in the
game we would be looking for a breakout one way or the other.
The bullish pattern by definition has an upward bias for the
breakout but that's not a guarantee.  We would consider a long
play once shares trade over $50 or a short play if shares close
under $45.






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

Retail sales drive markets higher
by Russ Moore

Retail sales drive markets higher. The experts were wearing a 
healthy amount of egg on their faces when the retail sales 
numbers were released this morning. The data showed an increase 
of +7.1 percent versus the +3.2 percent, with the majority of the 
gain coming from zero percent financed autos. The “blow away” 
number helped lift markets to another positive session with the 
DOW adding +0.7 percent, the NASDAQ gaining +0.7 percent, and the 
NDX tacking on +0.3 percent.

Volume was on the heavy side with 1.42 billion shares moving on 
the big board and 2.14 billion shares moving on the tech index. 
Winners took out losers by a 19/12 margin on the NYSE and a 21/16 
difference on the NASDAQ.

On the broader markets, cyclical, chemical, retail, airline, 
paper and brokerage sectors were on the rise while oil/oil 
service, biotech, drug, utility, and natural gas sectors 
succumbed to selling pressure. Internet, hardware, and networker 
stocks added to their recent gains while chip stocks saw some 
profit taking.

Tomorrow’s data will include initial jobless claims, September 
business inventories, and the Philly Fed index for November.

Volatility indexes (VIX), (VXN), continue to fall but still have 
a ways to go before signaling a reversal is at hand. Meanwhile 
the bulls are gaining confidence and the longer this rally runs, 
the tougher it’ll be for the bears to turn things around.


VIX 
Wednesday 11/14 close: 28.60


VXN
Wednesday 11/14 close: 56.38


30-yr Bonds
Wednesday 11/14 close: 5.02


Total Put/Call Ratio: .72


Equity Option Put/Call Ratio: .59


Index Option Put/Call Ratio:  1.67


===

NASDAQ 100 Index (NDX/QQQ)
52-Week High: 103.51
52-Week Low:   28.19
Current close: 39.64

Volume/Open Interest
Maximum calls: 38/ 67,746
Maximum puts : 33/100,051

Moving Averages
 10 DMA 37
 20 DMA 36
 50 DMA 33
200 DMA 42

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: 589.16

Volume/Open Interest
Maximum calls: 600/12,581
Maximum puts : 500/ 9,321

Moving Averages
 10 DMA  574
 20 DMA  565
 50 DMA  552
200 DMA  613

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: 1141.22

Volume / Open Interest
Maximum calls: 1100/18,096
Maximum puts :  950/21,537

Moving Averages
 10 DMA 1114
 20 DMA 1097
 50 DMA 1076
200 DMA 1190

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:  9,823.61

Volume / Open Interest
Maximum Calls: 94/22,795
Maximum Puts   92/18,744

Moving Averages:
 10 DMA  9,549
 20 DMA  9,420
 50 DMA  9,261
200 DMA 10,211

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: 581.38

Volume / Open Interest
Maximum Calls: 580/  720
Maximum Puts:  420/1,576

Moving Averages
 10 DMA 569
 20 DMA 551
 50 DMA 504
200 DMA 537

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: 538.51

Volume / Open Interest
Maximum Calls: 570/ 533
Maximum Puts:  460/ 833

Moving Averages
 10 DMA 512
 20 DMA 480
 50 DMA 456
200 DMA 571

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: 389.24

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

Moving Averages
 10 DMA 392
 20 DMA 393
 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 11/09
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 
10/23/01     377,177   413,658   (36,481)     0.1%
10/30/01     377,468   413,729   (36,261)   (0.06%)
11/06/01     376,807   416,063   (39,256)    8.2%

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
10/23/01       127,016    71,212    55,804     9.9%
10/30/01       123,546    71,225    52,321    (6.2%)
11/06/01       132,106    81,208    50,898    (2.7%)

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 
10/23/01      29,920    40,358   (10,438)  (19.7%)
10/30/01      32,055    45,574   (13,519)   29.5%
11/06/01      39,410    47,890    (8,480)  (37.0%)

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
10/23/01       11,567     6,934    4,633     (22.9%)
10/30/01       12,725     6,475    6,250      34.9%
11/06/01       11,406     8,143    3,263     (47.7%)

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

DOW JONES INDUSTRIAL
Commercials   Long      Short      Net     %Change 
10/23/01      25,568    11,832   13,736     (9.2%)
10/30/01      25,872    12,556   13,316     (3.1%)
11/06/01      25,977    11,951   14,026      5.4%

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
10/23/01       4,902    11,900    (6,998)     (7.8%)
10/30/01       4,261    11,220    (6,959)      0.0%
11/06/01       3,569    12,281    (8,712)     25.2%
 
Most bearish reading of the year:  (7,572) - 5/08/01
Most bullish reading of the year:   1,909  - 1/16/01


                    Small Specs               Commercials
S&P 500         (Current)  (Previous)     (Current) (Previous)
Open Interest
Net Value        +50,898     +52,321        -39,256     -36,261

Total Open
Interest %       (+23.86%)  (+26.86%)     (-4.95%)   (-4.58%)
                 net-long   net-long      net-short  net-short


                     Small Specs             Commercials
DJIA futures     (Current) (Previous)    (Current) (Previous)
Open Interest
Net Value          -8,712     -6,959          +14,026    13,316
Total Open
interest %       (-54.97%)    (-44.95%)      (+36.98%)  (+34.65%)
                 net-short   net-short     net-long    net-long


                     Small Spec              Commercials
NASDAQ 100      (Current) (Previous)    (Current) (Previous)
Open Interest
Net Value         +3,263      +6,250         -8,480    -13,519

Total Open
Interest %        (+16.69%)   (+32.55%)     (-9.71%) (-17.41%)
                 net-long   net-long      net-short net-short


What COT Data Tells Us
----------------------
Indices:.Four weeks and counting as the Commercials barely budged 
in their net-short position on the S&P 500. We did see a move 
worth noting on the NASDAQ 100 with the Commercials and Small 
Specs headed in opposite directions. The Commercials reduced 
their net-short position while the Small Specs reduced their net-
long positions. Are the Commercials moving towards a net-long 
position on the NASDAQ? We have seen considerable strength on the 
tech index this week and a move to net-long by the Commercials 
would get our attention.

Gold: No significant changes on Commercial positions.

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
11/06 35,435 contracts net-short

Data compiled as of Tuesday 11/06 by the CFTC.





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PremierInvestor.net Newsletter               Wednesday 11-14-2001
                                                   section 2 of 2
Copyright  2001, All rights reserved.
Redistribution in any form is strictly prohibited.

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In section two:

Net Bulls
  New Bullish Plays:    CIEN
  Closed Bullish Play:  CHKP

StockBottom/Active Trader
  Closed Bullish Plays: HON

High Risk/Reward
  New Bearish Play:     WBSN
  Stop Adjustments:     AOL and FFIV
  Closed Bullish Play:  HM

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
  --------------------

CIENA Corp. - CIEN - close: 18.77 change: +0.34 stop: 17.74

Company Description:
CIENA Corporation's market-leading optical networking systems 
form the core for the new era of networks and services worldwide. 
CIENA's LightWorks(TM) architecture enables next-generation 
optical services and changes the fundamental economics of 
service-provider networks by simplifying the network and reducing 
the cost to operate it. (source: company press release)

Why We Like It:
The fiber optics industry has been a huge loser for the market 
and investors for months.  It's painful just to look at previous 
high flyers like JDSU, NT, GLW, even CIEN.  However, if there is 
a play in this sector CIEN might be one to watch.  The company 
just recently announced earnings and management had a lot of good 
things to say.  CIEN is in a healthy condition with $1.6B in 
revenues and close to $1.7B of cash on hand.  Management feels 
confident that they will meet Wall Street's estimates for the 
fourth quarter in spite of the overall slowdown in the sector.  
The company plans to triple its share of the networking equipment 
market.  Management also told analysts and shareholders that they 
would be cutting about 10 percent of its work force.  

So why would we choose CIEN over the likes of JDSU and GLW who 
posted stronger gains today?  We like CIEN because the current 
share price allows us to limit our risk.  The obvious risk is the 
current bull rally in the Nasdaq ends and we see several days of 
consolidation.  If this comes true then nearly any previous high-
flyer we trade will probably see substantial pullbacks.  If this 
occurs we want to be out quick.  A quick look at CIEN shows the 
stock has been consolidating near support of $18 for the last day 
and a half.  There was a decent late day surge in share price but 
we can still start the play with a stop at $17.74 which will put 
our risk just over 5%.  The first hurdle for the bulls is 
overhead resistance at $20.  If this was our goal then we'd use a 
much tighter stop or not play at all.  Our goal is higher at 
$21.95.  The point-and-figure chart has a bullish price objective 
of $26 but we know $22 is tough resistance from the run that 
occurred in late October.  We decided to check the relative 
strength p-n-f chart for CIEN and found it to be in a column of 
X's against the S&P 500.  This is interpreted as a bullish signal 
for investors.  

There are multiple ways to play CIEN but we don't feel this is a 
trade for everyone.  Aggressive traders may want to look for dips 
back to $18.00 or $18.25 while others can look for the breakout 
above $20.  If you choose the later you should consider using a 
tighter stop.  This is one play where we will quickly adjust 
stops higher once the P/L is strongly positive.

Picked on November 14th at $18.77 
Gain since picked:          +0.00
Earnings Date               12/13 (not confirmed)





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

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

Check Point Software - CHKP - cls: 40.75 chg: -1.15 stop: 39.90

We'd like to blame today's closure on the bullish CHKP play on 
two new broker downgrades but we honestly think traders don't 
care.  CHKP traded higher at the open as the GSO.X also traded 
higher but a negative performance by MSFT, losing 2.78%, weighed 
heavily on the index.  As the index pulled back after trading 
above resistance of 170 CHKP pulled back to bounce at new support 
of $40.  There was a dip below $40 after 1:PM that stopped us 
out.  Shares of CHKP rebounded somewhat despite MSFT's steady 
fall throughout the session.  Brokers appear to be battling each 
other over their view of CHKP.  Yesterday we saw a strong upgrade 
from JP Morgan.  Today brought an AG Edwards downgrade from 
Strong Buy to a Hold and Legg Mason's downgrade from Buy to 
Market Perform.  With the GSO.X software index closing right at 
170 the stock and the group could go either way.  If MSFT leads 
the GSO lower back to support near 160 then CHKP could fall back 
to fill the gap created on Tuesday's open.  Aggressive traders 
may see a bounce at $38.00 to $38.25 as a potential entry point 
but we would confirm the overall market environment first.  
Closing the CHKP play at $39.90 allowed us to end with almost 
four points and a move of over 10%.  We're not complaining.

Picked on November 9th at $35.96 
Gain since picked:         +3.94
Earnings Date              10/18 (confirmed)





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

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

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

Honeywell Intl - HON - close: 31.20 change: -0.50 stop: 31.15 

This one-time Dow component has really been under performing the 
index lately.  And it is seldom good news when the Oracle of 
Omaha, or his portfolio managers, decide to liquidate their 2.25 
million share stake in a stock they just bought.  That's right, 
in an SEC filing that came out today, Berkshire Hathaway sold its 
entire position in HON along with a few equities it bought 
earlier this year.  After moving our stop up to breakeven in 
yesterday's newsletter we didn't have much room for error and 
Premier Investor was quickly stopped out.  The good news for 
longer-term investors was the bounce midday as HON found support 
again at its 15-dma.  This technical level as held as support for 
the last three weeks.  At this time we would not look to go long 
the stock until it could close (convincingly) over the $32 level.  
Even then we'd have to consider the overall market conditions 
before committing capital.  

Picked on November 2nd at $31.15
Gain since picked:         +0.00
Earnings Date              10/24 (confirmed)






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

===============
HR New Plays
===============

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

Websense, Inc - WBSN - close: 26.69 change: -1.51 stop: 28.70

Company Description
Websense Inc. is the worldwide leader of employee Internet 
management (EIM) solutions. Websense Enterprise software enables 
businesses to manage how their employees use the Internet. This 
supports an organization's efforts to improve employee 
productivity, conserve network bandwidth and storage costs, and 
mitigate legal liability. Founded in 1994, the company serves 
more than 15,000 customers worldwide, ranging in size from 100-
person firms to global-sized corporations. These include 255 of 
the Fortune 500, 85 of the Nikkei 225 and 46 of the FTSE 100, 
encompassing more than 9.6 million customer seats, pre-paid on a 
subscription basis. (source: company press release)

Why We Like It:
Shares of this Internet/software company have run from $10 to a 
recent high of $29 from October 2nd to November 12th.  The first 
stage of this run was predicated on a pre-announcement that 3Q 
earnings would exceed estimates by a large margin.  On October 
23rd those earnings came out severely beating estimates.  Since 
then the second rush in the stock has fueled a run from $17.50 to 
$29 and we think it may be time for a pull back.  The stock fell 
back over 5% today but found support at $25.60.  WBSN should have 
price support at $25 but there is overhead resistance at $28.50-
$29.00.  The MACD is starting to rollover and the histogram is 
about to turn negative.  It looks like the +150% run up is way 
overdue for some prolonged profit taking that could take it back 
to our target of $21.  Shares have obviously been very volatile 
to the up side and it's very possible that some of it was due to 
a short squeeze as there is only a float of 12.4M shares.  We're 
going to start the play with a stop just over Tuesday's high at 
$28.70.  A failed rally at $28 or $27.50 may be a good entry to 
short but definitely confirm stock direction!  Another approach 
would be to wait for shares to trade below $25.00 or its 10-dma 
(currently at 26.30).  This trade is not for everyone and it's 
crucial you play with stops.  

Picked on November 14th at $26.69 
Gain since picked:          +0.00
Earnings Date               10/23 (confirmed)





===================
HR STOP ADJUSTMENTS
===================

AOL - close: 38.25 change: +0.25 stop: 36.90

*no change in stop price.  However, many quote systems show
the low today as $35.30.  That is in error.  Checking the
time and sales shows the correction as $38.30.  

---

FFIV - close: 23.14 change: +1.13 stop: 21.95 *new*

The additional 5% move in FFIV today has allowed us to
move the stop within 10 cents of today's low.  If FFIV 
trades to $24.80 before we get stopped out we'll close 
the play.


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

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

Homestake Mining Co. - HM - close: 7.93 change: -0.08 stop: 7.95

We certainly had plenty of warning.  Shares of HM have been 
trading sideways for a couple of weeks straight.  When the gold 
index (XAU.X) closed below the 200-dma yesterday we felt strongly 
that our HM play would be stopped out today.  Right on cue, as 
the broader markets added another positive day the gold sector 
fell again and this time shares of ABX, the company merging 
(buying) with HM broke below support of $15.30 and HM fell below 
support of $8.00.  Next time we'll use a trigger point to enter 
the play!

Picked on November 2nd at $ 8.37
Gain since picked:         -0.42
Earnings Date              10/31 (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 

MO      Philip Morris Companies    47.58     +0.58
MER     Merrill Lynch & Co         51.90     +1.00
HI      Household Intl. Inc        60.90     +0.90
LEH     Lehman Brothers            71.25     +1.51
CWP     Cable & Wireless           15.60     +0.51

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

AMZN    Amazon.com Inc              9.49     +2.20
LVLT    Level 3 Communications      7.32     +1.83
TERN    Terayon Communications     13.09     +2.63
AGIL    Agile Software Corp        15.99     +1.07
TUES    Tuesday Morning Corp       17.99     +1.70

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

SI      Siemens Aktkien            55.16     +4.01
HWP     Hewlett-Packard Co         22.08     +1.85
RTRSY   Reuters Group              68.40     +1.15
ANF     Abercrombie & Fitch Co     23.09     +2.34
ACF     Americredit Corp           25.30     +1.05
 

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

XOM     Exxon Mobil Corporation    38.70     -1.80
SGP     Schering-Plough Corp       34.68     -1.10
SC      Shell Transport & Trading  41.82     -3.20
FRX     Forest Laboratories Inc    68.00     -1.85
OXY     Occidental Petroleum Corp  24.85     -1.01

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

PEG     Public Service             40.26     -1.01
DPL     Dpl Inc                    23.56     -0.84
DRXR    Drexler Technology         21.04     -0.98



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