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Daily Newsletter, Wednesday, 12/05/2001

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PremierInvestor.net Newsletter              Wednesday 12-05-2001
                                                  section 1 of 2
Copyright  2001, All rights reserved.
Redistribution in any form is strictly prohibited.

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In section one:

Market Wrap:      A "nice" bullish rally?
Watch List:       ISSX, CNXT, RYL, INTU, SUNW, JCI, ATML, AMTD, 
                  MGAM, PLAB, SLOT, RATL, PCAR, UVN, TGT, MCTR, 
                  SEAC, LAMR, NETA, VAL, XLK, IBM, IVGN, VAR, 
                  IMMU, SRV
Market Sentiment: Tech tornado
Play-of-the-Day:  -none-

-----------------------------------------------------------------
U.S. Market Numbers
-----------------------------------------------------------------
MARKET WRAP  (view in courier font for table alignment)
-----------------------------------------------------------------
      12-05-2001          High     Low     Volume Advance/Decline
DJIA    10114.29 +220.45 10142.32  9891.35 1.75 bln   2063/1098
NASDAQ   2046.84 + 83.74  2056.81  1980.30 2.72 bln   2420/1272
S&P 100   597.70 + 12.07   599.38   585.63   Totals   4483/2370
S&P 500  1170.35 + 25.55  1173.62  1143.77
RUS 2000  479.42 + 11.58   480.43   467.84
DJ TRANS 2612.49 + 77.64  2618.47  2531.40
VIX        24.79 -  0.54    24.79    23.62
VXN        47.44 -  0.60    48.90    46.57
TRIN        0.34
Put/Call    0.44
-----------------------------------------------------------------

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

A "nice" bullish rally?

What was that?  I think last night's and this morning's thoughts 
of a "nice" bullish rally for stocks on the premise of what a 
higher bond YIELD might have on things was a bit of an 
understatement.  Today, bond YIELDS unraveled and stocks surged, 
as the Dow Industrials broke above the psychological resistance 
level of 10,000 and vaulted to their 200-day moving average of 
technical resistance just before session's end.

Dow Industrials Chart - 




In the first hour of trading, the Dow Industrials (INDU) sliced 
through psychological resistance of 10,000.  At 03:30 PM EST, the 
Dow traded the 10,142 level, which was just shy of the 200-day 
moving average.  Subscribers still need to be cautious of the 
technicals here, but the Dow has got some momentum.  Momentum 
that is similar to that found in mid-April of this year when the 
Dow rallied right up to its 200-day MA.  What followed was a 
period of consolidation before the next leg higher.  Look for 
bond market action to play an important role going forward, just 
as it seemed to do today.

The 200-day MA didn't just come into play in the Dow Industrials.  
Today we saw the very same 200-day moving average present itself 
as resistance in the S&P 500 Index (SPX.X).  Also interesting is 
a level of retracement pointed out in the November 26th market 
wrap near 1,175.

S&P 500 Index Chart -




A move above the 1,175 level in the S&P 500 (SPX.X) now sets the 
stage for bullishness to 1,318 (let's say 1,300 as conservative).  
Again... a good test of technical resistance.  Traders will note 
the two different colors of retracement.  The "red" is a rolled 
up retracement which was actually anchored at the $939 level and 
the 50% retracement level for the "red" retracement was fit at 
the 1,552 level.  This is a more advanced technique of 
retracement based on longer-term trading (see Nov. 26th market 
wrap), but its very interesting how the 19.1% retracement from 
the red bracket, along with the 200-day MA seemed to come into 
play today.  I "turned off" the red 0% and 50% levels as their 
numbers overlapped the blue levels and made it difficult to read 
the chart.

Not to confuse things, but it is IMPORTANT for subscribers to 
read and understand the November 26th market wrap.  Retracement 
levels on the above chart are from that commentary.  What's also 
quite interesting is the "normal" retracement we've been using 
prior to that commentary on November 26th.  This will help 
solidify how important current trading levels are as it relates 
to the S&P 500 Index.

S&P 500 Index (SPX.X) - near-term retracement




The above chart is that of the SPX with retracement we have been 
using for months.  Here we used "fitted" retracement.  Look how 
important the 1,170 level was back in July and August.  During 
that time, the 1,170 level sure acted like support, but when 
broken to the downside, all heck broke loose!  Now we've got a 
rally going and today's close came right at the 1,170 level!  
There's an old saying in technical analysis that "support broken 
becomes resistance."  If equity bears are on the cusp of caving 
in the action point for further upside may well be the 1,175 
level.  A trade at 1,175 may trigger some extreme "buy programs" 
and really get things rolling for the bulls.


Oh my!  Another 200-day moving average!

It's amazing isn't it!  Is it a coincidence that the 10-year 
YIELD rallied right up to its 200-day moving average?  I guess 
you could call it a coincidence, but only if you don't think that 
bond market action has anything to do with liquidity and stock 
market action.

10-year YIELD Chart - 




We thought this morning's higher YIELD in the bond market might 
hold good things in store for stocks today, and boy did it ever!  
The ferocity that YIELD jerked higher gives hint that there was 
some "oomph" behind the selling.  Equity trader are really 
starting to get the feeling that a move above the 5.0% level 
could see further unraveling in the bond market and perhaps set 
the stage for a new bear market in bonds and a bull market for 
stocks.

There's still so much time and lots of work to be done!

Often times, a day like today will have an investor/trader 
feeling like they've missed the boat.  Believe me... there's a 
lot of work yet to be done for trader/investors to claim a new 
bull market.  While I view today's action as very bullish, there 
are still some levels of resistance that need to be violated to 
the upside.  Many levels are "longer-term" trends and moving 
averages.  There are plenty of stocks, with plenty of upside left 
in them, that we have yet to trade.

Powerwave Technologies - 




Those that think the bull market has left them behind, need only 
look at some longer-term charts.  The weekly chart of Powerwave 
Technologies (NASDAQ:PWAV) looks as if the stock is still in a 
base building phase.  This one still looks like a bull would be 
very early, but a break above the $21.50 level could really have 
the stock on the move.

Don't feel like you need to chase stocks that you feel are 
overextended or might pull back.  There are plenty of stocks 
still in bases.  Should bullishness continue to build in the 
markets, there will be plenty of opportunities and plenty of 
upside to participate in.

The worst thing a "bullish only" investor/trader can do right now 
is dump their entire account back into stocks at what could be a 
near-term level of resistance, get a pullback in the market and 
then get discouraged and pull the plug on things.

The best strategy remains to slowly leg into positions, be 
willing to take profits off the table when targets are achieved 
(bullish or bearish) and trade with discipline.  Find a pattern 
that is working in your favor and play that pattern until it 
fails you.  Once failed (eventually pattern will fail), assess 
what went wrong and look to correct things.

Looking ahead

Tomorrow, an equity bull wants to see some follow through in 
selling for bonds.  I would be somewhat surprised if we see the 
same type of conviction behind further bond market selling, but 
you just never know.

I want to approach each day with the "anything can happen" 
attitude right now.  I think subscribers know what to look for 
based on the different retracement levels and moving averages 
discussed above, along with future action in the bond market.

To think that "valuation concerns" talk in the media is going to 
go away anytime soon, would be stretching things.  We're going to 
hear that type of talk for the next couple of months.  It will 
take some blowout number in a technology stock like we witnessed 
today in shares of Autozone (NASDAQ:AZO) $79.15 +18.8% in the 
"auto parts" category to get bears back into hibernation.

I can't tell you the number of times I heard that Intel 
(NASDAQ:INTC) was overvalued in 1998 and 1999 as the stock 
doubled in price, then doubled again a year later.  Eventually, 
the stock was trading at an "attractive multiple" and that's when 
it was time to be concerned.  In the end, the only thing that 
mattered for a trader/investor was to monitor their risk and 
levels of support.  When a stock starts doing something that most 
think is unwarranted, that's the time to be concerned.  Recently 
we profiled shares of Intel as a short on PremierInvestor.net and 
dropped the play at a $0.65 cent loss.  While we were wrong on 
Intel, we weren't wrong on our stop.

I'm all for "listening" to the media, but I want to test the 
reports against what I observe in charts we look at on a daily 
basis.  Does the MARKET agree/disagree with what we hear in the 
media?  In the end, it's only what the MARKET thinks of the stock 
we're short or long that really matters.

Jeff Bailey
Senior Market Technician


==========
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.

----------

Internet Security Systems - ISSX - close: 37.00 change: +3.10

WHAT TO WATCH:  There is no way of know what direction the 
markets will head tomorrow morning but if the momentum continues
bulls could take the indices higher.  If this occurs, ISSX might
be able to reach resistance at $40 (a 10% move).  If profit taking
ensues, then traders should be looking for shares to find support
between $34.50 and $35.00.  The 200-dma could be a factor at 33.25
but that's strong move down from here.  Trade cautiously.  




---

Conexant Systems - CNXT - close: 17.50 change: +1.19

WHAT TO WATCH:  One of the many chip stocks that helped lead the
market higher today, CNXT has broken out to new 10-month highs.
The stock "should" see resistance at $19.00 and $20.00 (in addition
to the $18.00 already discovered today).  The huge volume would
make one think there is more upside in the current move higher.
If there is, trade very carefully.  We would look for the stock
to pull back to support at $16.00, or worse case $15.00.  Below
$15.00 we're not interested and we'll have to re-evaluate.




---

Ryland Group - RYL - close: 66.70 change: +2.80 

WHAT TO WATCH:  There was talk today about the home building sector
and RYL has been on quite a roll lately.  The stock looks very
overbought in the short-term but the stock just broke out to a new
52-week high.  If one were to draw a trend line from the peaks
starting back in February 2001, it would tell us that RYL might
be able to trade to $72.50.  We'd feel more comfortable buying
on a dip (bounce) back at $62.50 but the volume today could be
telling us that the momentum is not over yet.  Be cautious.




---

Inutit Inc - INTU - close: 44.88 change: +1.15

WHAT TO WATCH:  The software sector has made a huge move from the 
September lows and INTU has enjoyed a nice rebound.  The stock 
ran from under $30 to almost $47.50 in early November.  Since 
that peak, INTU has retraced to find new support between $39 and 
$40.  This last week has uncovered a new rally attempt and shares 
are trading under the $46 resistance level.  Traders should watch 
INTU for a potential entry point.  We would prefer to buy on the 
dip near $43.  Expect resistance at $46 and $47.50 and keep your 
eye on the GSO.X.  Keep in mind that INTU receives a large 
portion of their income from its financial software and tax 
filing products.  With the end of the year in sight, there could 
be a renewed interest in the stock.




---


Sun Microsystems - SUNW - close: 14.57 change: +0.83

WHAT TO WATCH: Huge volume in SUNW pushed shares higher today, 
though the advance still leaves the stock under its 200-dma.  If 
the news from Intel’s mid quarter conference tomorrow suggests 
that a bottom has in fact been reached, the entire tech sector 
may add a third day to the current rally.  MACD has flattened out 
and, though Stochastics indicate shares are slightly over bought, 
fundamentals and the simple fact that tech appears to be back, 
might just portend further advances in the former high flyer.  We 
would look for SUNW to breakthrough its 200-dma just above the 
$15 mark or bounce off support at $14.  The latter may be an 
entry point.  Only aggressive traders should consider chasing it 
higher.




---

Johnson Controls - JCI - close: 80.96 change: +2.06

WHAT TO WATCH: Two days of increasing upside volume has allowed 
JCI to recapture its 10-dma and the $80 level.  Now the stock is 
threatening short-term upside resistance at 81.75.  Stochastics 
have crossed over with yesterday’s bounce and MACD suggests that 
a new upward sloping trend could be at the helm.  The 52 week 
high of 81.77 isn’t far away and if the current momentum holds, 
it should be easily attainable.  JCI is a large conglomerate and 
if you feel like the market is getting away from you this may be 
a stock to watch that hasn't move too far yet.  We would wait for 
shares to close above $82.00 to make sure the breakout over 
resistance is not a fake out.  JCI recently increased its 
dividend and is scheduled to report earnings on January 18th.




---

Atmel Corp. - ATML - close: 8.70 change: +0.46

WHAT TO WATCH:  If you're like many traders, you probably feel 
like the chip sector has taken off without you.  Dozens of 
semiconductor stocks are up huge over the last two days and going 
long now could prove harmful.  There is a money rotation theory 
that believes traders may decide to take profits in chips stocks 
that have made huge gains over the last couple of days and rotate 
into other chips stocks that have been lagging the group.  If 
this is true then ATML could attract some attention even if the 
SOX decides to pull back.  This isn't to say that ATML hasn't 
made any gains.  On the contrary, the stock has rebounded nicely 
from price support at $8 bolstered by its 50-dma.  Very short-
term or aggressive traders may want to aim for the 12% difference 
between current levels and overhead resistance at $9.75.  Beyond 
that gains become difficult as the $10 mark could prove to be a 
sturdy psychological mark to tackle made even tougher by the 200-
dma just above it.




---

Ameritrade - AMTD - close: 6.48 change: 0.55

WHAT TO WATCH: A bull market is just what the online brokerage 
industry has been waiting for.  This strength in the tech market 
could resupply the long vanquished commissions that once freely 
flowed into AMTD’s bottom line.  The stock cruised through short-
term resistance at the 10-dma, pushing past the 200-dma of 6.36 
on strong volume.  While we don’t see AMTD returning to 10.00 
anytime soon, if shares can surpass 7.00, buyers may run the 
stock up to 8.00.  Either way, small money moves still translate 
into big percentage gains.  Keep your eye on two things.  No. 1, 
watch the $7.25 to $7.35 level for resistance.  No. 2, watch the 
XBD.X securities broker/dealer index for confirmation.  Don't
forget your stop!




---------------
CHECK THESE OUT
---------------

As you may have guessed, with a huge market wide rally on massive
volume, there were dozens upon dozens of bullish breakouts and
patterns emerging.  We have listed a few worth looking at for
continuations of the current trend or for pull backs and possible
entry points on the bounce.  Near the bottom are a few bearish
developments for short traders.

Bullish Moves
-------------
(legend: rez = overhead resistance)

MGAM - great trend, very overbought.
PLAB - nice breakout over $29 and $30, still resistance close by.
SLOT - nice rebound over 62.50, rez at 65.00 and 66.50.
RATL - love the bounce off 15-dma and breakout over 200-dma & $20.
PCAR - is the cup and handle over?  rez at $65, need confirmation.
UVN  - great trend, not too volatile, rez @ $40. entry at $35-$36?
TGT  - retail is hot. rez at $40, wait for breakout.
MCTR - I'm speechless.  Short-squeeze? strong vol. Very High Risk!
SEAC - big move today.  Prefer a pull back to $32.
LAMR - nice break over 200-dma. rez at $40, possible buy at $38.
NETA - beautiful breakout.  traded right to a fitted retracement
       level of resistance.  prefer to buy a bounce at $23.50 or $24.
VAL  - nice move over $40.  definitely worth watching.
XLK  - another breakout over price rez ($25) and 200-dma (25.50)
       volume was very strong. not a fast price mover.
IBM  - incredible breakout.  in blue sky territory. 


Bearish Moves
-------------

IVGN - failed rally at rez of $70, closed below 200-dma
VAR  - closed below its 200-dma and 50-dma
IMMU - bearish engulfing candlestick pattern. tech. support @ $22.
SRV  - 2nd day below 200-dma, could fall to $5.00?



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

Tech tornado
by Russ Moore

Tech tornado. Investors were swept up in the tech buying 
euphoria, pushing the NASDAQ through the 2000 mark and taking the 
other major indices along for the ride.

The NASDAQ added +4.3 percent, hitting levels last seen in 
August. The big-cap NDX was up +5.3 percent and the DOW gained 
+2.2 percent. Volume was extremely heavy, (another positive sign 
for those of bullish persuasion), with the NYSE seeing 1.72 
billion shares trade hands, and the NASDAQ moving 2.69 billion 
shares. Needless to say, market breadth was positive as winners 
outpaced losers by a 21/11 margin on the big board and 24/13 on 
the tech index.

Chip, networking, software, and hardware sectors were the biggest 
winners on the tech side while brokerage stocks enjoyed healthy 
gains on the broader markets. Drug, healthcare and insurance 
sectors gave back a little.

Monday’s economic data was considered a positive sign going 
forward but was tempered by non-market news that prevented a 
rally on Wall Street. Today, investors received another piece of 
upbeat news with the NAPM non-manufacturing index rising to 51.3 
percent versus last month’s 40.6. Keep in mind that a number 
above 50.0 is indicative of economic expansion.

We spoke yesterday of the NASDAQ’s ability to lead the markets to 
higher ground and we certainly saw evidence of that today. The 
DOW and SPX, currently sitting just under their 200DMA’s will 
need to clear those hurdles in order to keep this rally going. 

The bulls have entered the china shop, and the bears are the 
china. Yes folks, the bulls are on a roll and, if the non-tech 
indices can crack their respective resistance levels, we might be 
in for a sustained rally. 

VIX 
Wednesday 12/05 close: 24.79


VXN
Wednesday 12/05 close: 47.44


30-yr Bonds
Wednesday 12/05 close: 5.36


Total Put/Call Ratio: .62


Equity Option Put/Call Ratio: .50


Index Option Put/Call Ratio:  1.64


===

NASDAQ 100 Index (NDX/QQQ)
52-Week High: 103.51
52-Week Low:   28.19
Current close: 42.85

Volume/Open Interest
Maximum calls: 40/146,900
Maximum puts : 40/118,745

Moving Averages
 10 DMA 39
 20 DMA 39
 50 DMA 35
200 DMA 41

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: 597.70

Volume/Open Interest
Maximum calls: 640/5,513
Maximum puts : 500/7,817
Moving Averages
 10 DMA  587
 20 DMA  586
 50 DMA  565
200 DMA  605

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: 1170.35

Volume / Open Interest
Maximum calls: 1150/45,212
Maximum puts : 1100/50,013

Moving Averages
 10 DMA 1144
 20 DMA 1138
 50 DMA 1099
200 DMA 1176

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: 10,114.29

Volume / Open Interest
Maximum Calls: 98/26,190
Maximum Puts   90/47,812

Moving Averages:
 10 DMA  9,881
 20 DMA  9,815
 50 DMA  9,442
200 DMA 10,143

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: 609.63

Volume / Open Interest
Maximum Calls: 620/  636
Maximum Puts:  540/1,160

Moving Averages
 10 DMA 600
 20 DMA 589
 50 DMA 538
200 DMA 536

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: 585.80

Volume / Open Interest
Maximum Calls: 520/ 754
Maximum Puts:  470/1563

Moving Averages
 10 DMA 528
 20 DMA 525
 50 DMA 470
200 DMA 560

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: 395.33

Volume / Open Interest
Maximum Calls: 420/406
Maximum Puts:  360/330

Moving Averages
 10 DMA 399
 20 DMA 395
 50 DMA 394
200 DMA 392

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, 11/30. 
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 
11/13/01     381,539   421,284   (39,745)    1.2%
11/20/01     369,784   415,822   (46,038)   13.6%
11/27/01     371,336   421,405   (50,069)    8.7%

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
11/13/01       136,047    87,645    48,402    (4.9%)
11/20/01       140,507    86,861    53,646     9.8%
11/27/01       151,317    92,807    58,510     9.1%

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 
11/13/01      38,751    49,257   (10,506)   23.9%
11/20/01      38,042    46,446    (8,404)  (20.0%)
11/27/01      37,259    48,315   (11,056)   31.5%

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
11/13/01       11,568     6,505    5,063      55.1%
11/20/01       12,933     8,230    4,703      (7.1%)
11/27/01       12,540     8,359    4,181     (11.1%)

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 
11/13/01      24,145    10,204   13,941     (0.6%)
11/20/01      25,033    11,525   13,508     (3.1%)
11/27/01      24,243    11,496   12,747     (5.6%)

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
11/13/01       4,094    12,121    (8,027)     (7.8%)
11/20/01       3,609    10,565    (6,956)    (13.3%)
11/27/01       4,228    10,630    (6,402)     (8.0%)
 
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        +58,510     +53,646        -50,069     -46,038

Total Open
Interest %       (+23.97%)  (+23.59%)      (-6.32%)   (-5.86%)
                 net-long   net-long       net-short  net-short


                     Small Specs             Commercials
DJIA futures     (Current) (Previous)    (Current) (Previous)
Open Interest
Net Value          -4,228     -6,956          +12,747    13,508
Total Open
interest %       (-43.09%)    (-49.07%)      (+35.67%)  (+36.94)
                 net-short   net-short     net-long    net-long


                     Small Spec              Commercials
NASDAQ 100      (Current) (Previous)    (Current) (Previous)
Open Interest
Net Value         +4,181      +4,703         -11,056    -8,404

Total Open
Interest %        (+20.01%)   (+22.22%)     (-12.92%) (-9.95%)
                 net-long   net-long      net-short net-short


What COT Data Tells Us
----------------------
Indices:.We’ve seen the Commercials add to their net-short 
positions for the second week in a row after being stationary for 
a month. Is this a bearish sign? Too early to tell, but as we 
said last week, a failure to go net-long (bullish) is an 
indication of caution, and one that must be respected by longer-
term players.

Gold: Last week we highlighted the fact that Commercials reducing 
their net-short positions by a wide margin could indicate a 
bounce is around the corner. Looking at the XAU (gold and silver 
index) this week we see that the index has enjoyed a 5 percent 
gain. Nothing to get too excited about, however, with the 
Commercials going net-long (bullish) this week, it’s worth 
monitoring.

10/30 33,199 contracts net-short
11/06 35,435 contracts net-short
11/13 23,637 contracts net-short
11/20  2,489 contracts net-short
11/27  1,738 contracts net-long

Data compiled as of Tuesday 11/20 by the CFTC.




=========================
Play-of-the-Day (none)
=========================

No play of the day for Thursday, Dec. 6th, 2001.
With the huge rally in the markets, many of our long
plays are looking extended and if the rally continues
the short plays are probably not the best place to be.




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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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Do not duplicate or redistribute in any form.



PremierInvestor.net Newsletter               Wednesday 12-05-2001
                                                   section 2 of 2
Copyright  2001, All rights reserved.
Redistribution in any form is strictly prohibited.

The entire newsletter is best viewed in COURIER 10 for alignment
=================================================================
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charts and graphs, click here:
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In section two:

Net Bulls
  Bullish Play Updates:  EXEL, NVDA, NXTL
  Closed Bearish Plays:  QCOM, RLRN

StockBottom/Active Trader
  Bullish Stop Adjsutments: SEE
  Bearish Stop Adjsutments: MO  

High Risk/Reward
  Bullish Play Updates: T, QLGC

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 Play Updates
================

  --------------------
  Bullish Plays
  --------------------

EXEL - close: 15.60 change: +0.00 stop: 15.24 *new*

We were very disappointed in EXEL on Wednesday.  The entire 
market is in rally mode and EXEL spends the day trading sideways.  
We think traders should be cautious.  The BTK.X added 2.7% and 
closed back above its ascending bullish trend line and EXEL does 
nothing!  Only aggressive traders should consider bounces at 
$15.00 as potential entry points, which should be support.  
Despite this technical and price level of support we are raising 
our stop to $15.24.  This will reduce our risk to 61 cents.  
Until EXEL breaks out above the $16.00 mark we're not going to 
feel comfortable with this long play.

Picked on November 30th at $15.85
Gain since picked:          -0.25
Earnings Date               11/13 (confirmed)




---

NVDA - close: 62.83 change: +4.69 stop: 60.98 *new*

Two big days in a row like this will make traders spoiled.  NVDA 
is up more than $9 in two days (16.7%).  We didn't officially 
"pick" NVDA until it triggered $55.45 so we're only up $7.38 or 
13.3%.  The big moves have been fueled by incredible rallies in 
the chip sector.  The SOX.X led another huge move with a 41.6 
point gain of 7.6%.  The index broke out above price resistance 
and above its 200-dma.  The sector and many of its components are 
very overbought short-term and need to pull back but short 
covering could keep the rally going.  The question is for how 
long?  We are going to raise our stop and put an exit target on 
NVDA.  First of all, we are raising our stop to $60.98, which is 
just below the bounce near $61 that occurred just after 2:00 PM 
ET.  This should protect a gain of $5.53 or 9.97%.  Now, if the 
rally's momentum carries through in the morning hours on Thursday 
we want to be ready.  Thus, we're placing an exit price of $64.90 
on NVDA.  If the stock trades to this level we'll close the play 
for a profit of almost 9.5 points or 17%.  

Picked on December  4th at $55.45 
Gain since picked:          +7.38
Earnings Date               11/08 (confirmed)




---

NXTL - close: 12.25 change: +0.37 stop: 11.38 *new*

Considering the velocity of the rally in the tech sector today we 
would have expected a little bit more than a 3% move in NXTL.  
Don't get us wrong.  We're not complaining.  The stock added to 
the powerful move on Tuesday and shares are above the important 
$12 level.  However, given the recent positive moves, we want to 
raise our stop to 11.38, which will limit our exposure to 50 
cents should the stock suffer any undue profit taking.

Picked on December 4th at $11.88
Gain since picked:         +0.37
Earnings Date              01/23 (unconfirmed)





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

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

Qualcomm - QCOM - cls: 61.99 chg: +2.08 stop: 60.61

Another strong day in the tech sector translated into an upside 
breakout in shares of QCOM.  Unfortunately, the impressive move 
took out our short position early on in the session as better 
than expected economic data took the major averages to multi-
month highs.  Additional upside resistance is only 50 cents 
away at 62.50 and if profit taking ensues in the near future, 
QCOM will likely move back into its trading range.  For now, 
though, tech is too hot to short as cash comes off the sidelines 
and flows into equities.  We’re anticipating the effects of tax 
loss selling that could take place during the month and with QCOM 
down significantly from its 52 week high, that time could arrive 
soon if the major markets don't breach their 200-dma's.

Picked on November 28th at 57.29
Loss since picked:         -3.32
Earnings Date              11/06 (confirmed)




---

Renaissance Learning - RLRN - cls: 27.53 chg: +2.38 stop: 26.11

Tech stocks were red-hot on Wednesday and the GSO.X software 
index closed up 6%.  The bull stampede on Wall Street was sparked 
by positive economic reports this morning and bears decided today 
was a good day to cover.  We turned cautious in Tuesday's update 
when shares closed over its 10-dma and the stock produced a 
powerful reversal in today's rally.  We would have been stopped 
out early this morning at $26.11.

Picked on November 24th at 25.16
Loss since picked:         -0.95
Earnings Date              10/15 (confirmed)






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


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

Bullish Plays
-------------

SEE - close: 46.75 change: +0.90 stop: 44.95 *new*

Shares of SEE enjoyed today's rally to the tune of 1.96%.  The 
stock has broken above the $46 resistance level and we believe 
bulls are aiming for $50.  We've chosen to raise our stop to 
44.95 as both $46 and $45 should act as support.  For those 
readers who have been following the packaging industry, BMS also 
broke out to a new high and BLL, a stock we desperately wanted to 
add last night, also produced a strong gain off of support.


Bearish Plays
-------------

MO - close: 46.14 change: -0.51 stop: 47.25 *new*

With investors believing an economic recovery is on the way and a 
potential bottom in the tech sector there is no reason not to 
rotate money out of defensive issues.  MO's share price should 
continue to be a victim of this line of reasoning and so far the 
stock has been moving our direction.  We would have preferred to 
see the stock close below $46 but today's move was enough 
confirmation that we are lowering our stop to $47.25, which is a 
few cents above Tuesday's high.




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

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

  --------------------
  Bullish Plays
  --------------------

AT&T Corp - T - close: 17.57 change: -0.02 stop: 16.95 *new*

We are becoming increasingly frustrated over T's lack of response 
to the bidding developments over its broadband division.  The 
majority of their cable-Internet subscribers have been moved to 
T's own network but we never saw that as a major issue in the 
first place.  The stock did rally to the $18.00 level but came 
all the way back to close flat on the day.  I know this is 
supposed to be a "high risk/high reward" play but I'm beginning 
to feel that the risks are mounting.  We are raising our stop to 
$16.95, which is just below the $17.00 and the 15-dma at 17.08.  
Confirm stock direction before considering new plays.

Picked on November 29th at $17.62 
Gain since picked:          -0.05
Earnings Date               10/23 (confirmed)




---

QLogic Corp - QLGC - close: 56.18 change: +3.23 stop: 54.98 *new*

QLGC proved our point in Tuesday's update.  There is nothing to 
say shares "have to" come back before they trade higher.  Of 
course QLGC's rally was accentuated by the rally in the SOX.X.  
The chip index soared almost 42 points to gain 7.6%.  This sent 
the index rocketing through price resistance at 550 and its 200-
dma at 561.  Are the chips stocks short-term overbought?  You 
betcha, but that doesn't mean they can't go higher first.  We 
would NOT suggest traders chase these issues but if you're 
currently in the play we can tweak our strategy.  First of all, 
we are raising our stop to $54.98.  This should ensure a gain of 
$4.33 or 8.5%.  Currently, the newsletter is up $5.53 or 10.9%.  
Now that we have raised our stop we're going to reconfirm our 
target.  If the rally's momentum can carry through on Thursday 
then we'll close the play if QLGC can trade to $60.00.  However, 
we are going to add an amendment to this strategy.  If QLGC 
trades above $59.00 we will raise our stop to $57.45.  It is 
entirely possible that QLGC trades higher in the morning and 
we're stopped out at $57.45.

Picked on December  4th at $50.65
Gain since picked:          +5.53
Earnings Date               10/23 (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 

DT      Deutsche Telekom           18.14     +0.69
BA      Boeing Co                  35.89     +0.51
TMX     Telefonos De Mexico        34.65     +1.06
P       Phillips Petroleum Co      58.66     +2.01
KYO     Kyocera Corp               80.70     +7.20

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

TSM     Taiwan Semiconductor       19.08     +1.55
ORCL    Oracle Corp                15.37     +1.57
SPLS    Staples Inc                18.73     +1.33
CCE     Coca-Cola Enterprises      19.50     +1.63
NTAP    Network Appliance Inc      19.25     +2.41

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

TXN     Texas Instruments Inc      33.50     +2.50
SGP     Schering-Plough Corp       37.35     +1.35
IBM     Intl. Business Mach       121.40     +4.76
HD      Home Depot                 49.90     +2.20
DELL    Dell Computer              29.67     +1.59

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

CCR     Countrywide Credit         40.15     -2.01
IVGN    Invitrogen Corp            64.99     -3.42
VAR     Varian Medical Systems     67.00     -2.05
IMMU    Immunomedics Inc           22.17     -1.86
WFSI    Wfs Financial              20.50     -2.25

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

BAX     Baxter Intl.              50.30     -1.08
RTN     Raytheon Co               32.36     -0.79
IMMU    Immunomedics              22.17     -1.86





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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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