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Daily Newsletter, Thursday, 11/15/2001

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PremierInvestor.net Newsletter               Thursday 11-15-2001
                                                  section 1 of 2
Copyright  2001, All rights reserved.
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In section one:

Market Wrap:      S&P 500 reaches "bull confirmed" status
Market Sentiment: Running on empty
Play-of-the-Day:  Are You Open Minded?

-----------------------------------------------------------------
U.S. Market Numbers
-----------------------------------------------------------------
MARKET WRAP  (view in courier font for table alignment)
-----------------------------------------------------------------
       11-15-2001           High     Low    Volume Advance/Decline
DJIA     9872.39 + 48.78  9903.04  9808.25  1.4 bln   1492/1644
NASDAQ   1900.57 -  2.62  1922.12  1882.84  2.0 bln   1721/1917
S&P 100   590.44 +  1.28   592.36   585.86   Totals   3213/3561
S&P 500  1142.24 +  1.03  1146.46  1135.06
RUS 2000  449.39 -  3.43   453.04   449.39
DJ TRANS 2454.00 + 61.03  2458.48  2389.71
VIX        27.78 -  0.82    29.10    27.45
VXN        57.45 +  1.07    59.84    56.64
TRIN        0.95
Put/Call Ratio       .71
-----------------------------------------------------------------

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

S&P 500 reaches "bull confirmed" status

There's so much taking place in the markets, it becomes difficult 
to keep up with everything.  Yesterday's trading action had one 
of your key indicators in the bullish percent area reaching a 
level of "bull confirmed" status.  As progressions have gone in 
the past, it's not necessarily a surprise.  

In late October, our shorter-term indicator of "risk" and market 
strength in the NASDAQ-100 bullish percent ($BPNDX) achieved the 
"bull confirmed" status, and now the S&P 500 bullish percent 
($BPSPX) has done the same.

Bullish Percent Comparison of NASDAQ-100 and S&P-500





I've written about the "tidal" impact a market can get and this 
is part of what is taking place in the bullish percent charts.  I 
like to look at other bullish percent charts too, but the 
comparison and understanding of how market bullishness can build 
and eventually fade is important.

The NASDAQ-100 Index (NDX.X) is full of volatile NASDAQ listed 
technology stocks, so it makes sense that the bullish percent 
indicator would be more volatile and quicker to move up and down.  
The S&P 500 Index (SPX.X) contains just 45 "info tech" stocks and 
50 "telecom services" stocks that might be considered more 
technology related.  The remaining 405 stocks (81%) are "energy 
10", "materials 15," "industrials 20," "consumer discretionary 
25," "consumer staples 30," "healthcare 35," "financials 40," and 
"utilities 55."  This makeup is important to understand and where 
we also find sector rotation from time to time.

Just as we used the "inchworm" analogy for the Dow Industrials, 
we get that same type of movement in the S&P 500.  

As you can see from the bullish percent charts, the NASDAQ-100 
was extremely oversold at just 2% bullish and that's where bears 
had the most risk.  Like a rubber band snapping back, the bullish 
percent unwound to the upside.  Then in early November (red b 
circled in green) the NASDAQ-100 did give a sell signal on its 
bullish percent chart, but look at what the S&P 500 bullish 
percent was doing.

In early November (red b circled in green) the S&P 500 was also 
snapping back into shape and action there was much like a rubber 
band.  You can almost feel the "push" of the much broader S&P 500 
bullish percent acting like a tidal wave and pushing the NASDAQ-
100 bullish percent back higher.

Almost like a parent running up a hill as little junior comes 
running down the hill, screaming and waving his hands in the air, 
the much bigger parent (S&P-500) gathered up the child and 
carried him in the upward direction as the internals were 
strengthening.

What is different "today" than this spring and the May (red 5) 
and June (red 6) periods, is that the S&P 500 bullish percent is 
not in an "overbought" condition.  In May and June of this year, 
both the NASDAQ-100 and S&P-500 internals were at "overbought" 
conditions.  When the internals began to weaken, it was the 
NASDAQ-100 that weakened first, and when the S&P 500 turned 
south, the tidal wave was to the downside.

Very Important for your trading strategy

Understanding this dynamic is important.  It should help play 
into your/our trading strategy going forward.

Shorting

Yes, some technology stocks are on the list as potential short 
candidates, but we need to be aware that the broader S&P 500 
bullish percent is now "bull confirmed."  In point and figure 
lingo, the S&P 500 MARKET is in a bull market.  The NASDAQ-100 is 
also in a bull market phase, but it is also overbought.

When you study the NASDAQ-100 bullish percent, you see that it 
was volatile in the May and June months.  It whipped back and 
forth.  Due to space limitations, I couldn't show all of the 
bullish percent chart of the NASDAQ-100, but the full chart 
($BPNDX) at www.stockcharts.com shows this index reached 
overbought levels (above 70%) three different times from late 
April to late May.

During that time, there were some good shorting opportunities, 
but it was important for bearish traders to trade cautiously.  
Yes, it's easy to "think" all you had to do was get short in May 
and that was it, but when you look at the volatility and some 
three day NASDAQ-100 runs that spanned a $45-$51 (+13%) move from 
the May 15th close to May 21st close, it wasn't such a 
"guarantee" that things were going to work out in a bears favor 
at that time.  There were some stocks that jumped nearly 30% 
during that same time.  If you were short one of those and didn't 
use a disciplined stop, your trading account most likely took a 
lot of heat.  Some were even forced to close those positions 
right near the top for a rather substantial loss.

What I'm trying to get across here is this.  If you're going to 
be doing some shorting, have a rather short-term time horizon for 
the trade once a position is established.  If the NASDAQ-100 
bullish percent and S&P 500 bullish percent reverse into columns 
of O's, then you begin to actually get the sense that the 
internals are beginning to weaken.

Remember, the NASDAQ-100 was trading the $4,600 levels just 20-
months ago.  At today's close of $1,582 this index has declined 
roughly 65%.  Bearish traders should not be thinking that they're 
shorting a market top.

As it relates to shorting some technology stocks, the NASAQ-100 
bullish percent tells us that we're shorting at correct levels 
considering an overbought condition.  This is where you should be 
doing some shorting (not at oversold levels in September).  
However, we also need to understand that tidal wave in the S&P 
500 that could still come to shore and push things higher.

A bearish trader needs to be looking for stocks where near-term 
overhead supply is close by.  Overhead supply is NOT a stock that 
is breaking to new 5 months high and thinking that overhead 
supply from a year ago is going to necessarily be met with 
selling.  For the most part, smart money that was trying to 
support at stock 9-months ago, most likely left the party at the 
breakdown, or not long after.  "Uneducated/undisciplined money" 
most likely tried to hang in there, then gave in at the lows when 
bullish percent levels were extremely "oversold."

Buying

What I want to try and avoid doing is adding too many new 
positions in technology stocks with the NASDAQ-100 bullish 
percent above the 70% level.  I'll dip my toe in the water from 
time-to-time, but to do so, I want to be looking at a stock that 
is breaking out of a base, where it looks like money is starting 
to be committed to the stock.  This way, should a pullback occur 
in technology, I haven't bought a stock that has run from $15 to 
$25 (we buy at $25) and then pulls back to $20 and immediately 
find ourselves with a 20% loss and begin wondering if this really 
is a bull market.

According to Dorsey/Wright and Associates (www.dorseywright.com), 
the Semiconductor Bullish Percent (BPSEMI) is at 71% bullish and 
much like the NASDAQ-100 is now considered "overbought" on the 
bullish percent charts.  This is the ONLY sector followed by 
Dorsey/Wright that currently has a bullish percent reading above 
the 70% level.

One thing I think is best for a new bull just sitting down at the 
table is to look at some "boring" stocks.  

Here's a stock I alerted traders to at www.OptionInvestor.com 
yesterday, based on many of the principles and techniques I talk 
about here each day.  For those interested, I wrote about this 
stock in yesterday's 03:00 EST update on OI.

Cendant Corporation Chart - 




Yesterday, I got an alert at the $14.83 that shares of Cendant 
(NYSE:CD) were breaking above the 50% retracement level.  MACD 
was trending higher and there was some near-term upside to the 
$16.41 level that correlated with a rounding 200-day MA that I 
could see as a potential near-term target for a bullish trade.

The point/figure chart showed a potential "triple top buy signal" 
and I knew the probabilities of success were in my favor based on 
the Purdue University study by Professor Earl Davis.  I also 
pulled up a relative strength chart of CD vs. the S&P 500 Index, 
and it has just reversed back into a column of X's.  There were a 
lot of things technically that hinted the stock could make a move 
higher.  It wasn't "technology" and I liked that as the NASDAQ-
100 bullish percent was "overbought" and I was looking for 
something "boring" but something that had some upside.  

What helped even more, was that today, Cendant (CD) guided 
earnings estimates higher after the opening of trading.  Funny 
thing was, in today's "market monitor" on OptionInvestor.com, I 
alerted trades at $15.05 that the stock was breaking above 
yesterday's high of $15.04 and that the stock was still very much 
a bullish play candidate.  It was probably 30-minute later when 
the newswires reported Cendant's announcement.

Here's something new to measure the inchworms movement!

Every time I look at our hypothetical Dow Industrial portfolio, I 
keep find new ways to use it.  In yesterday's 01:00 EST update on 
PremierInvestor.net I mentioned the "inchworm."  Today I was 
studying the Dow 30 and thought it would be interesting to truly 
try and measure shor-term what was taking place at the upper end 
(top 15) and lower end (bottom 15).  With the markets relatively 
mixed, I wanted to get a feel for "what end of the inchworm" was 
moving if any.  

After all, I thought a bull market would be created by the "lower 
end" of the inchworm inching higher, the "upper end" perhaps 
pulling back a bit or anchoring in place, before the next 
"expansion" phase.  Here's what I'm doing and you can do to, I 
find it most interesting and still quite bullish!  Again, this is 
very short-term, but if we follow from time to time or at the end 
of each day, we get a much better feel for the internals of the 
inchworm!




I can monitor what is going on during the day at each end of the 
inchworm by adding a "Profit/Loss Today" column to the portfolio 
and then benchmark off the previous day's close and dividing the 
"inchworm" in two.  

Today, 11 stocks in the Dow traded lower, so breadth was actually 
positive 19/11.  By "subtotaling" the top 15 and bottom 15 by 
profit/loss on the day, I see that the "lower end" actually 
performed better than the "upper end" as the lower end showed a 
gain of $158.52, while the upper end showed a gain of just 
$46.90.  Today, the Dow didn't really move like an inchworm, but 
more like a "bull-worm".  The head was moving higher on a net-
basis, but so was the tail!

What this tells me at the end of the day is that bears are still 
pretty nervous and uncertain about things.  If the market is set 
for a retest of the lows anytime soon (baring some unforeseen 
market event) it makes little sense that the lagging part of the 
inchworm is moving higher.  

There are only two things that could explain this type of action.  
One would be that bulls are just running wild.  Two would be that 
bears are stepping up their short covering as they've seen some 
stocks perform better than they had expected and now they're 
going to make sure they lock in some gains in case the bullish 
trend continues.

In yesterday's 01:00 "inchworm" update, we talked once again 
about two stocks in the middle of the inchworm that still looked 
bullish.  International Paper (NYSE:IP) and General Electric 
(NYSE:GE).  Both stocks gained more than 1.5% today and that 
handily beat today's 0.49% gain in the Dow.  They also 
outperformed the NASDAQ Composite -0.13% and the S&P 500 +0.09%.  

They won't go up every day, but give hint that the inchworm is on 
the move and the internals are functioning properly.

In favor, out of favor, in favor

Over the years, I've seen just about everything.  A stock can be 
in so much favor that it acts like a steamroller and just rolls 
on and on and on.  Then one day, something changes, or at least 
begins to change and the stock starts to lose favor.  Sometimes 
the stock gets cremated and stays out of favor for years.

I first commented on shares of Service Corp. Int. (NYSE:SRV) on 
OptionInvestor.com back when the stock was trading near the $2.75 
level earlier this year and appeared to be coming back to life.  
On October 26th, we thought this stock might start to show up on 
the institutional radar screen as the stock had made its way back 
above the $5 level to a high of $8, but then pulled back into a 
good support level in early October and looked to be firming near 
$5.37.  Volume sure doesn't look like there has been much 
institutional activity, but that could change soon.  

Since our profile as bullish for longer-term investors (see Long-
term Plays section of PI) on October 26th at $6.30, the shares of 
Service Corp. (NYSE:SRV) have been trading in a fairly tight 
range.  With the 50-day MA now starting to round out a break 
above the $6.56 level could "liven" things up.

Service Corp. Chart - 




More active traders may now want to have shares of Service Corp. 
(NYSE:SRV) on their watch list near-term.  Setting an alert at 
$6.56 for an upside move.  Our stop for longer-term investors is 
$5.35, but a short-term trader would most likely only be willing 
to risk a move to $5.98 as their stopping level.

For those that don't think stocks can trade higher in a "bear 
market" shares of SRV are up 455% since their December 29, 2000 
close of $1.75.  For those that think the stock is just "too 
expensive" this stock traded as high as $47.12 back in July of 
1998.  I actually had a client that sold some at $45.  Later that 
year, we couldn't believe how fortunate he was as the stock got 
clobbered to $20 just 6-months later.  

Like I said, it's amazing how stocks can be in favor, then lose 
favor, and sometimes they'll regain favor again.

Jeff Bailey
Senior Market Technician


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

Running on empty
by Russ Moore

Running on empty. Markets appeared to be running out of gas today 
with the DOW struggling throughout the session and ending with 
only a minimal gain of +0.5 percent. Given their enormous gains 
of late tech stocks came under some selling pressure today, 
leading the NASDAQ into negative territory with a loss 
of -0.1 percent. The NDX closed with a loss of -0.2 percent.

Volume was solid for the second day in a row with 1.45 billion 
shares trading hands on the big board and 2.00 billion shares 
moving on the NASDAQ. Market breadth had losers edging winners by 
a 16/15 margin on the NYSE and a 19/17 mark on the tech index.

Airline, cyclical, paper, chemical and retail sectors were strong 
on the day while gold, brokerage, utility, and natural gas were 
weak. The big losers on the broader markets were oil (XOI) -4.4 
percent, and oil service (OSX) -10.59 percent.

Tech action was somewhat mixed with most sectors experiencing 
only fractional gains/losses. Chip and Internet stocks were on 
the losing side while hardware was a winner.

Initial jobless claims fell 8,000 to 440,000 however, continuous 
claims rose +126,000, an 18yr high. Business inventories fell -
0.5 percent versus the -0.3 expected. That good news was 
partially offset by the fact that sales declined by -2.8 percent, 
the largest decline since 92’. The Philly Fed index came in at -
20.2, much better than last months’ -27.4.

Tomorrow we’ll see October CPI, industrial production, and 
capacity utilization.

Bulls have every intention of running this rally right into the 
New Year. Remember though, the bears are approaching hibernation 
and will be looking to fatten up ahead their lengthy rest. 

VIX 
Thursday 11/15 close: 27.78


VXN
Thursday 11/15 close: 57.45


30-yr Bonds
Thursday 11/15 close: 5.20


Total Put/Call Ratio: .71


Equity Option Put/Call Ratio: .60


Index Option Put/Call Ratio:  1.23


===

NASDAQ 100 Index (NDX/QQQ)
52-Week High: 103.51
52-Week Low:   28.19
Current close: 39.48

Volume/Open Interest
Maximum calls: 38/ 64,581
Maximum puts : 33/100,051

Moving Averages
 10 DMA 38
 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: 590.44

Volume/Open Interest
Maximum calls: 600/12,428
Maximum puts : 500/ 9,349

Moving Averages
 10 DMA  577
 20 DMA  567
 50 DMA  552
200 DMA  612

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: 1142.25

Volume / Open Interest
Maximum calls: 1100/18,181
Maximum puts :  950/21,261

Moving Averages
 10 DMA 1120
 20 DMA 1101
 50 DMA 1077
200 DMA 1189

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:  9,872.39

Volume / Open Interest
Maximum Calls: 94/22,744
Maximum Puts   92/17,284

Moving Averages:
 10 DMA  9,610
 20 DMA  9,455
 50 DMA  9,260
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: 584.04

Volume / Open Interest
Maximum Calls: 580/  389
Maximum Puts:  420/1,576

Moving Averages
 10 DMA 571
 20 DMA 556
 50 DMA 505
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: 532.34

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

Moving Averages
 10 DMA 517
 20 DMA 486
 50 DMA 455
200 DMA 570

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: 389.91

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

Moving Averages
 10 DMA 391
 20 DMA 392
 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.



=========================
Play-of-the-Day (Bearish)
=========================
* This is a new bearish play for the high risk/high reward section *


Intel Corp - INTC - close: 30.78 change: -0.54 stop: 31.60

Company Description
Intel, the world's largest chip maker, is also a leading 
manufacturer of computer, networking and communications products. 
(source: company press release)

Why We Like It:
To some traders shorting Intel in a bull market atmosphere like 
this is heresy, if not dangerous.  We know that not everyone will 
be able to see our logic and frankly that's okay.  We consider 
this a high-risk play even though we're only risking 82 cents or 
2.6%.  As our readers know the semiconductors have been leading 
this market rally higher.  Traders used to say,  "As the chip 
sector goes, so goes the Nasdaq."  If this is true then the chips 
will be the first to see consolidation (or profit taking) from 
this recent rally.  We are not expecting the long-term trend to 
change (we hope) but merely a very short-term pull back.  We need 
to emphasize short-term.  The rest of the market is looking very 
bullish.  We are actually very encouraged that the S&P 500 just 
moved into a bull-confirmed status today.  This is great news!  
Unfortunately, the semiconductor sector has just reached the 
overbought level on the bullish percent charts.  That doesn't 
mean the sector is going to stop moving higher but it does mean 
that the bulls or the buyers have the greatest risk.  

Now take these observations and combine them with the growing 
expectation that the Nasdaq could see strong profit taking once 
it reaches for the 2000 level.  Heck, the composite has struggled 
with 1900 these last couple of days.  Ditto on the DJIA.  Does 
anyone not believe there will not be an effort to do some profit 
taking if the Dow trades near 10K?  This doesn't mean we're 
calling an end to the recent bull rally.  We only feel it is 
looking tired and may need a break.  If you understand how we're 
looking at the market then you should be able to see the strategy 
behind this short in Intel.  

On Wednesday the stock ran right up to its bearish resistance 
line on its point-and-figure chart.  This is the perfect 
opportunity for supply and demand to do some shuffling as bulls 
take profits and bears prepare new positions.  In addition to the 
p-n-f chart, the daily chart is showing huge price resistance 
between $32 and $32.50 stemming from mid-April.  So here's the 
game plan.  The newsletter will pick Intel as a short at $30.78.  
We'll start the play with a stop one cent above yesterday's high.  
If we can get a quick 10% drop in the stock price we'll close the 
play.  That means if INTC trades to $27.70 we're out.  Looking at 
the chart, shares could see support at $28 which harbors the 200-
dma and this could suffice as a good exit point as well (we're 
going to look for the intraday spike down below this).  

Picked on November 15th at $30.78 
Gain since picked:          +0.00
Earnings Date               10/16 (confirmed)






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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
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factors beyond our control.

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Do not duplicate or redistribute in any form.

PremierInvestor.net Newsletter                  Thursday 11-15-2001
                                                     section 2 of 2
Copyright  2001, All rights reserved.
Redistribution in any form is strictly prohibited.

The entire newsletter is best viewed in COURIER 10 for alignment
=================================================================
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In section two:

Net Bulls
  Bullish Play Updates: CIEN, LGTO, NETA
  Bearish Play Updates: WWCA
  Closed Bullish Play:  ALGX

Stock Bottom / Active Trader
  Bullish Play Updates: GE, IKN
  Bearish Play Updates: BRL

High Risk / High Reward
  New Bearish Play:     INTC
  Bullish Play Updates: AOL
  Closed Bullish Play:  FFIV

Split Trader
  - none -

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


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

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

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

CIENA Corp. - CIEN - close: 19.09 change: +0.32 stop: 17.74

So far so good.  We added CIEN last night as a bullish play for 
the fiber optic sector that hadn't run up too far.  The stock 
offered a small dip near the open to 18.44 before quickly trading 
higher.  At the moment shares appear to have some selling 
pressure at 19.50 but the daily chart is definitely showing 
higher lows as it builds a bullish wedge under resistance near 
$20.  Volume has been somewhat lighter the last couple of days 
and we're not expecting a lot ahead of the weekend on Friday 
unless the broader markets surge or fall strongly.  To contrast 
CIEN's +1.7% performance today, JDSU was down 1.74% while GLW was 
up 3.9%.  Traders looking for entries should watch the Nasdaq or 
the NDX for guidance as many market watchers are speculating the 
tech sector needs a couple days of consolidation (a.k.a profit 
taking) before it can move higher.  

Picked on November 14th at $18.77 
Gain since picked:          +0.32
Earnings Date               12/13 (not confirmed)




---

Legato Systems - LGTO - close: 10.46 change: -0.08 stop: 9.85

Yawn.  As the major markets trade sideways (Nasdaq -2.62, SPX +
1.00), shares of LGTO fell eight cents during its own horizontal 
shuffle.  The stock once again bounced at support near $10 but 
like other market watchers we beginning to wonder how long the 
tech rally can last.  We're still looking for a run to $12 but 
LGTO has to conquer the $11 mark first.  Traders can consider 
dips to $10 as potential entries but do so carefully.  Reconfirm 
broader market conditions before committing capital. 

Picked on November 8th at $10.47 
Gain since picked:         -0.01
Earnings Date              10/23 (confirmed)




---

Network Associates - NETA - cls: 23.26 chg: +0.17 stop: 22.15

Short-term traders in software stock NETA got another close call 
today as the morning dip to $22.30 was close to our stop at 
22.15.  Fortunately the stock quickly sprang higher only to find 
resistance at $23.50 for most of the day.  If you read our 
initial write up on the stock we mentioned that a move to $23 
wouldn't be a bad return and those traders who made that their 
target should be doing okay.  At the moment, Premier is up 2.44 
points or almost 12 percent in NETA since we picked it but we're 
holding out for a move to $24.50 to close the play.  Yet we're 
more than happy to be stopped out at 22.15 which would ensure a 
6.38% gain in the stock.  We are not surprised the stock traded 
sideways as the GSO.X index hugged the pivotal 170 level for most 
of the day (GSO.X, close $170, change: -0.10).  A move up from 
here in the index should fuel a new surge in the sector while a 
move down could foretell a decent round of profit taking.  We 
would not recommend new positions in NETA at this time unless 
you're willing to look for dips to $22 as an entry (with a tight 
stop underneath).  It will be interesting to see investors 
lighten up on positions going into the weekend or give into 
optimism and send the sector higher.

Picked on November 9th at $20.82 
Gain since picked:         +2.44
Earnings Date              10/18 (confirmed)





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

Western Wireless - WWCA - close: 26.87 change: +0.42 stop: 27.51*new*

We are turning cautious on this short play for wireless provider 
WWCA.  The stock has been stuck in a trading range between 25.75 
and 27.00 for the last four days but the last hour of trading on 
Thursday saw shares trying to breakout above the $27 level of 
resistance.  While this would make a very low risk entry to short 
the stock we would only do so with a very tight stop and only 
after confirming the stock's direction.  Shares have found 
unexpected strength near $26 and the negative MACD is just 
starting to stall while the histogram is signaling a bullish 
divergence.  We are moving our stop down to $27.51, which is one 
cent above the high on November 9th.  Those traders looking to 
limit their risk even more could consider a stop near $27.25 or 
even a few cents north of $27.00.  Enter new positions 
cautiously.  At this point we'd prefer a breakdown under $26 as 
the new bearish confirmation.

Picked on November 9th at $26.40 
Gain since picked:         -0.47
Earnings Date              11/07 (confirmed)





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

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

Allegiance Telecom - ALGX - close: 8.89 chg: -0.19 stop: 7.90

I remember one veteran trader that used to say, "if a trade isn't 
going your way in three days time but you haven't been stopped 
out yet then close the trade."  He was talking about a short-term 
swing trade where he was looking for a move in two to ten days 
time.  The more I look at ALGX the more I hear his voice echoing 
in the back of my mind.  Shares have slowly traded sideways after 
we picked ALGX on November 7th.  We did see the one-day surge 
higher to $9.67, but since then it's been a slow crawl.  The 5-
dma is starting to curve lower and the MACD histogram is starting 
to fade.  We were only looking for a move to $10 but the stock is 
overdue for decent pullback.  Traders that would prefer to give 
ALGX more time should watch their stops closely.  The 10-dma, 
which has not been touched since we entered November may offer a 
short-term trader a good spot to place a stop.  Coincidentally it 
is resting at our cost of 8.62.  

Picked on November 7th at $ 8.62
Gain since picked:         +0.27
Earnings Date              10/23 (confirmed)






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

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

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

General Electric - GE - close: 41.55 change: +0.67 stop: 39.90 

Investors saw GE running in the middle of the pack on Thursday.  
What do we mean?  Of the 18 Dow components that were positive, 
GE's gain of 1.63% put it near the middle of the group.  The 
stock has been strong since the Monday scare with the plane 
crash.  Since then the conglomerate has been steadily climbing 
and the MACD is positive.  Traders should be aware that shares 
are fast approaching what could be mild resistance at $42.25.  We 
would probably look for buying opportunities in dips but do so 
passively.  There is a lot of expectation that the Dow will see 
significant profit taking once it nears the 10K level.  As a 
component, GE will feel that pressure.  In contrast to that 
bearish bias is the bull-confirmed status in the S&P 500, a much 
broader look at the market as a whole.  The late afternoon bounce 
in GE at 40.80 is encouraging for tomorrow morning but we can't 
predict how investors will rotate money ahead of the weekend.

Picked on November 8th at $40.10
Gain since picked:         +1.45
Earnings Date              10/24 (confirmed)




---

Ikon Office Solutions - IKN - close: 10.21 change: -0.20 stop: 9.45

I have to admit that our bullish play in IKN is not quite 
performing as fast as we thought it would.  The up trend still 
looks fine, the stock has been able to hold its gains over the 
$10 level but the excitement just isn't there.  Don't get me 
wrong.  Sometimes we need a trade that is less than exciting.  
Something that moves slow and steady can be just what you're 
looking for.  We were encouraged by the dip to 9.76, or more 
correctly the strong bounce at 9.76 on Wednesday but need to see 
IKN hold that $10 mark.  Traders who like IKN may want to 
consider dips back to $10 as possible entry points.  Those 
looking to reduce their risk even more can consider stops under 
9.75 but that doesn't allow for a lot of room to maneuver.  
Shares did produce a new 52-week high yesterday.  What are we 
complaining about?

Picked on November 12th at $10.20
Gain since picked:          +0.01
Earnings Date               10/25 (confirmed)





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

Barr Labs Inc - BRL - close: 65.00 change: +0.94 stop: 66.68 

Looks like we'll be wishing we took a bit of our own medicine.  
In Tuesday's update we suggested that traders looking for a quick 
trade consider closing the short at $60 for a 10% move.  That 
opportunity came quickly on Wednesday morning.  The stock 
actually fell to a low of 59.21 before rebounding to what looked 
like new selling pressure at $62.  Then unexpectedly the 
management at BRL issued a press release to help save their stock 
price.  In the last hour of trading on Wednesday BRL released 
news that their 2nd quarter ending in December would be higher 
than current estimates.  Previous estimates were $1.30 to $1.40 
and BRL now claims they will hit $1.40 to $1.50 based on strong 
sales of their breast cancer drug Tamoxifen and a generic version 
of Prozac.  The moment this news came out the stock surged higher 
to close the day positive.  That rebound continued on Thursday 
but bears were able to fight off the bulls at $65.90.  Tomorrow 
will be a crucial day for the play.  The 5-dma has been acting as 
overhead technical resistance for the last few weeks.  BRL closed 
right at its 5-dma.  If shares trade higher than $66 we would 
expect the follow through to push the stock up to $69.  Bears 
should be cautious.  There is no way to know if this is a 
temporary oversold rally with the press release as the catalyst 
or the start of a new trend.  It's possible shares rally back to 
$70 and fail again setting up another potential opportunity to 
short it.

Picked on November 8th at $66.68
Gain since picked:         +1.68
Earnings Date              10/23 (confirmed)





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

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

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

Intel Corp - INTC - close: 30.78 change: -0.54 stop: 31.60

Company Description
Intel, the world's largest chip maker, is also a leading 
manufacturer of computer, networking and communications products. 
(source: company press release)

Why We Like It:
To some traders shorting Intel in a bull market atmosphere like 
this is heresy, if not dangerous.  We know that not everyone will 
be able to see our logic and frankly that's okay.  We consider 
this a high-risk play even though we're only risking 82 cents or 
2.6%.  As our readers know the semiconductors have been leading 
this market rally higher.  Traders used to say,  "As the chip 
sector goes, so goes the Nasdaq."  If this is true then the chips 
will be the first to see consolidation (or profit taking) from 
this recent rally.  We are not expecting the long-term trend to 
change (we hope) but merely a very short-term pull back.  We need 
to emphasize short-term.  The rest of the market is looking very 
bullish.  We are actually very encouraged that the S&P 500 just 
moved into a bull-confirmed status today.  This is great news!  
Unfortunately, the semiconductor sector has just reached the 
overbought level on the bullish percent charts.  That doesn't 
mean the sector is going to stop moving higher but it does mean 
that the bulls or the buyers have the greatest risk.  

Now take these observations and combine them with the growing 
expectation that the Nasdaq could see strong profit taking once 
it reaches for the 2000 level.  Heck, the composite has struggled 
with 1900 these last couple of days.  Ditto on the DJIA.  Does 
anyone not believe there will not be an effort to do some profit 
taking if the Dow trades near 10K?  This doesn't mean we're 
calling an end to the recent bull rally.  We only feel it is 
looking tired and may need a break.  If you understand how we're 
looking at the market then you should be able to see the strategy 
behind this short in Intel.  

On Wednesday the stock ran right up to its bearish resistance 
line on its point-and-figure chart.  This is the perfect 
opportunity for supply and demand to do some shuffling as bulls 
take profits and bears prepare new positions.  In addition to the 
p-n-f chart, the daily chart is showing huge price resistance 
between $32 and $32.50 stemming from mid-April.  So here's the 
game plan.  The newsletter will pick Intel as a short at $30.78.  
We'll start the play with a stop one cent above yesterday's high.  
If we can get a quick 10% drop in the stock price we'll close the 
play.  That means if INTC trades to $27.70 we're out.  Looking at 
the chart, shares could see support at $28 which harbors the 200-
dma and this could suffice as a good exit point as well (we're 
going to look for the intraday spike down below this).  

Picked on November 15th at $30.78 
Gain since picked:          +0.00
Earnings Date               10/16 (confirmed)





===============
HR Play Updates
===============

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

AOL Time Warner - AOL - close: 37.55 change: -0.70 stop: 36.90

The countdown is almost over.  Tomorrow night the blockbuster hit 
of the season, Harry Potter and the Sorcerer's Stone, will be 
released across the country.  By all accounts this will be a 
smash hit that will create a franchise that AOL Time Warner can 
milk for years to come.  All of this is well and good but the 
stock price took a blow today as the tech sector slide sideways.  
We came within 19 cents of being stopped out for a 5% gain at the 
low today but AOL managed a small bounce toward the close.  If we 
aren't stopped out tomorrow morning we could see another day or 
two of movie hype help fuel the bullish move along.  Industry 
watchers will be waiting on Monday to see what the weekend sales 
were for Harry's silver screen debut.  If the stock does slide 
lower, investors with a longer-term time horizon may want to 
watch for support near $36 as a possible entry point.

Picked on November 6th at $35.15 
Gain since picked:         +2.40
Earnings Date              10/17 (confirmed)





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

Websense, Inc - WBSN - close: 25.75 change: -0.94 stop: 27.91*new*

Our new high risk/high reward short play is off to a good start.  
Shares of WBSN slipped over 3.5% falling right to support at its 
15-dma and price support of 25.35.  Tomorrow could be the real 
test.  The $25.00 to $25.35 level of support needs to break for 
us to really capitalize on the profit taking this stock could 
see.  We're aiming for an exit price of $21.00, which is 50 cents 
above where the stock should have strong support at $20.50.  It's 
possible the stock continues to coil sideways with lower highs 
before the breakdown occurs but this will allow us to lower our 
stop.  With today's move in our direction we're going to lower 
our stop to 27.91 which is just above yesterday's high.  More 
conservative traders might be able to get by using today's high 
but this play looks promising and we don't want to get stopped 
out prematurely.  Aggressive traders may want to look for new 
entries on failed rallies to $26 or $26.50 while traders who 
prefer confirmation of the breakdown can wait for shares to close 
under $25.

Picked on November 14th at $26.69 
Gain since picked:          +0.94
Earnings Date               10/23 (confirmed)





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

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

F5 Networks, Inc - FFIV - cls: 21.27 chg: -1.87 stop: 21.95

We knew the probability of some profit taking was high and thus 
we continue to follow up with higher stops every chance we could 
on this high risk/high reward play.  We picked FFIV over the 
weekend at $19.19 and thankfully the stock allowed for a small 
pullback Monday morning before the stock took off.  By Wednesday 
shares had reached a high of 23.39 and in the Wednesday evening 
newsletter we raised our stop to 21.95 which was nine cents below 
the stock's low for that day.  FFIV started to trade lower right 
off the bat this morning but when it fell below $22.50 the profit 
taking began to speed up.  If the pull back continues we would 
expect FFIV to find some support at $20 but it is very possible 
the selling could bring it back to $19 or even $18 which should 
be strong price support.  We are closing the play with a move of 
$2.76 or more than 14%.  

Picked on November 9th at $19.19 
Gain since picked:         +2.76
Earnings Date              10/25 (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 

MC      Matsushita Elec Ind Co     13.40     +1.11
CWP     Cable & Wireless           16.70     +1.10
CD      Cendant Corp               15.73     +0.89
RCL     Royal Caribbean Cruises    15.05     +1.73
ROAD    Roadway Express Inc        32.16     +1.36

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

DCN     Dana Corp                  13.09     +1.56
LUME    Lumenis Ltd                19.92     +3.38
FCEL    Fuelcell Energy Inc        16.70     +3.15
CMNT    Computer Network Tech      18.88     +3.28
SMMX    Symyx Technologies Inc     16.21     +1.16

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

SNE     Sony Corp                  45.30     +4.47
IFX     Infineon Technologies      20.70     +1.14
TJX     Tjx Companies Inc          38.14     +1.39
INFY    Infosys Technologies       55.46     +5.36
BOW     Bowater Inc                49.06     +1.33
WFMI    Whole Foods Market Inc     40.75     +3.15
 

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

AZ      Allianz                    23.23     -1.07
PNC     Pnc Financial Svcs         57.65     -2.08
NOC     Northrop Grumman Corp      89.02     -2.49
TDW     Tidewater Inc              27.10     -3.05

        ..check out anything in Oil..

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

WFC     Wells Fargo & Co           41.86     -0.48
NBR     Nabors Industries Inc      27.01     -4.45
POG     Patina Oil & Gas           26.94     -1.45
TSCO    Tractor Supply Co          28.05     -2.75



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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

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


DISCLAIMER

Option Investor Inc is neither a registered Investment Advisor nor a Broker/Dealer. Readers are advised that all information is issued solely for informational purposes and is not to be construed as an offer to sell or the solicitation of an offer to buy, nor is it to be construed as a recommendation to buy, hold or sell (short or otherwise) any security. All opinions, analyses and information included herein are based on sources believed to be reliable and written in good faith, but no representation or warranty of any kind, expressed or implied, is made including but not limited to any representation or warranty concerning accuracy, completeness, correctness, timeliness or appropriateness. In addition, we do not necessarily update such opinions, analysis or information. Owners, employees and writers may have long or short positions in the securities that are discussed.

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