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Daily Newsletter, Tuesday, 12/11/2001

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PremierInvestor.net Newsletter                Tuesday 12-11-2001
                                                  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:      "Mercky" water
Market Sentiment: Nasty Medicine
Play-of-the-Day:  CTIC

-----------------------------------------------------------------
U.S. Market Numbers
-----------------------------------------------------------------
MARKET WRAP  (view in courier font for table alignment)
-----------------------------------------------------------------
       12-11-2001           High     Low    Volume Advance/Decline
DJIA     9888.37 - 33.08 10015.90  9866.85  1.3 bln   1557/1564
NASDAQ   2001.93 +  9.81  2032.63  1995.09  1.9 bln   1948/1703
S&P 100   579.32 -  1.92   587.42   577.93   Totals   3505/3267
S&P 500  1136.76 -  3.17  1150.89  1134.32
RUS 2000  474.77 +  0.59   478.19   473.43
DJ TRANS 3586.59 - 12.51  2602.70  2573.79
VIX        25.69 -  0.31    26.27    24.96
VXN        50.73 -  1.39    52.10    49.49
TRIN        1.35
Put/Call Ratio       .73
-----------------------------------------------------------------

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

"Mercky" water 

At 2:15 PM EST, the Federal Reserved announce it would lower fed 
funds by 1/4 point to 1.75%.  The Board of Governors approved a 
25 basis points cut to 1.25.  The markets looked to be dealing 
with the thought of a fed funds rate at a 40-year low rather 
well, until drug giant Merck (NYSE:MRK) clouded the water.

Trading in shares of Merck (MRK) were halted at approximately 
02:45 PM EST at the $64.98 level for news pending.  When news was 
released that the company was issuing its "uncomfortable with 
forward earnings estimates" and said it expected no growth in 
earnings for 2002, the broader markets gave back the bulk of its 
gains.  When trading resumed in shares of Merck, the lower open 
near $61 was enough to drag the Dow Industrials (INDU) into 
"unchanged" territory and other averages suffered some of the 
psychological impact of a declining Dow.

Merck Company Chart - 





Today's close for MRK below the $61 level is the lowest close 
this year.  In fact, today's close below $61 is the first close 
below that level since March 15, 2001.  Investors that bought the 
stock that day have seen the stock trade as high as $96.68 
(11/30/00).  The continued decline on big volume spikes this year 
gives further hint that longer-term investors are getting 
impatient with the lack of near-term growth potential.

Merck executives did say it sees double-digit earnings growth 
coming back in 2003.  For 2001 (this year) MRK did say that it 
would meet those earning target for $3.14 and that puts the stock 
at a 19.4 price-to-earnings ratio.  With a "no growth outlook" 
for the next twelve months, trading was heavy as the stock looked 
overvalued based on guidance.

Psychology takes a hit

It's hard to say the Merck's no growth outlook put a damper on 
what was shaping up to be a bullish trading session, but that's 
about the only thing I saw today that squashed an otherwise 
bullish stock session.

Can Procter & Gamble turn things around?

After the markets closed here in the U.S., Dow component Proctor 
& Gamble (NYSE:PG) said that demand for the consumer products 
giant offerings had earnings growing stronger than previously 
expected.  Almost as if this Dow component was throwing a 
counter-punch to Merck's earnings woes, PG said that it expects 
to beat Wall Street's per-share earnings by as much as 3 cents a 
share.  The average estimate of analysts has PG earning $1.00 per 
share for the current quarter ending in December.  Today, shares 
of PG closed down just fractionally at $76.70, but were trading 
near the $79 level in after-hours trading.

Current estimates for fiscal 2002 earnings (ending June 2001) are 
for PG to earn $3.44 and analysts are expecting those earnings to 
grow to $3.73 a share by end of fiscal 2003.  That would 
represent a forward growth rate of 8.4%.

Proctor & Gamble Chart - $1 box





Since giving a "buy signal" back in April (after red 4) at $61, 
the supply/demand chart for PG has been bullish.  In early 
November (red B) PG set off a powerful point and figure pattern 
in the "bullish triangle" when the stock traded $75 (November 1st 
on your bar charts).

I like shares of PG for the longer-term bullish trader at the 
opening of trading tomorrow.  A longer-term bull can follow a 
position with a stop at $69 (or $68.75 to avoid a round number 
stop).  An investor not wanting to risk that much of a decline 
will most likely see a reversal higher in the chart tomorrow to 
$78 and could follow with a stop just under $74.

I'm not sure that tomorrow's price action in shares of Proctor & 
Gamble will make up all of today's damage in the Dow Industrials 
average that Merck's decline created, but this is a stock that 
has beaten analysts earning's estimates the last four quarters.  
A move above the $80 level in the next week or two would have the 
stock breaking above a level not seen since March 2000.

Look forward

With the Dow Industrials having recently tested the 200-day 
moving average at the 10,139 level last week and not being able 
to close above that level, along with the recent decline back 
under the 10,000 level, we may well see some market psychology 
come into play near-term.

While I don't think Merck's (MRK) earnings warning today is 
necessarily a huge detriment to things, we need to understand 
that it is a Dow Component and how it price action impacts the 
Dow and market psychology.  It's been my long-held belief that 
the Dow Industrials plays a key role in investor/market 
psychology and right now, things are a little fragile.  
Subscribers most likely understand that Merck is not really an 
"economy" stock.  It's a "drug pipeline" stock that makes money 
to the bottom line based on a strong pipeline of new drugs coming 
to the market.  People don't necessarily quit buying prescription 
drugs to cure what ails them.  They may switch to a cheaper 
generic drug, but I don't read a lot of negative economics into 
today's announcement from Merck.  It may also be interesting to 
note that in Friday's market wrap, MRK fell to the #16 slot and 
back out of the top #15.  This action now is beginning to remind 
me of what took place in General Electric a couple of weeks ago.

On a day when the Fed was lowering interest rates by 25 basis 
points, it's tough to really draw any conclusions from the bond 
market.  YIELDS were lower across the board, but the longer-term 
maturities didn't see near the amount of buying that the shorter-
term maturities found today.  This makes sense near-term.  If the 
Fed is going to continue to ease (it still has 1.75% left that it 
could cut) then today's lower YIELD in the 13-week at 1.61% is 
following today's interest rate cut as one would expect.  Both 
the 10-year and 30-year YIELDS finished just above their 200-day 
moving averages, so my longer-term bullish view on the market 
holds today.

When we look at the S&P 500, we're seeing a bit of a chain 
reaction if not a mirror image of the Dow Industrials.  Just as 
the Dow Industrials found resistance at its 200-day moving 
average, the S&P 500 had trouble with its 200-day MA last week at 
the 1,175 level.  The MARKET now has the information it needed 
from the Fed in today's interest rate cut.  I think the current 
risk/reward for bulls is just unfavorable enough for many to keep 
some cash on the sidelines, looking for a pullback closer to the 
1,100 level as a bullish entry point.  

The NASDAQ Composite (COMPX) did finish today's trading session 
with a gain of 9.8 points to close at 2,001.93.  Merck is not a 
component of the NASDAQ, it's listed on the New York Stock 
Exchange.  The NASDAQ was trading at a session high just prior to 
today's warning from Merck.  The "give back" of nearly 31 points 
in the final 95 minutes of trading is hint of just how 
"psychological" things are right now and lends some credence to 
how Merck's warning impacted the market.  Today marks the sixth 
session in a row that the NASDAQ Composite has closed above its 
200-day MA, which now resides at 1,939 and is still trending 
lower.  Each day that passes where the NASDAQ is able to close 
above this key longer-term moving average, the more this average 
will flatten out and begin providing future potential support.

Stay disciplined 

Today, in the 01:00 EST Update, I got on my soapbox about bond 
YIELDS and "unrealistic" trends for stocks.  Right now, I feel it 
would be rather foolish for an equity bull to go overboard in 
his/her account and try buying some high-flying technology stock, 
just because it's trading in an upward trend that looks like it 
is at a 90-degree angle.  

One of our primary near-term "risk" indicators in the NASDAQ-100 
bullish percent ($BPNDX) from www.stockcharts.com, remains at an 
"overbought" level at 75% bullish.  More times than not, I see 
bad things happen to an impatient bull with this high of a level 
of bullishness.  I would NOT be trying to hold an account full of 
four-lettered stocks on margin right now!  Instead, I want to be 
in a position where I can buy some strong four-lettered stocks on 
a pullback, from the impatient bull that over-leverages his/her 
account on MARGIN and is forced to sell some stock to be on a 
pullback near support.

Giving into temptation

If it's "killing" you that a stock looks like it is just too 
bullish to pass up (even though its trend is parabolic in nature) 
then think about some exposure to the stock, but limit your trade 
size to 1/4 or 1/2 position.  Then do this.  Set a price level 
where you say "this stock should not trade at $XX.XX level to the 
downside."  What this will do is appease a short-term craving to 
buy a tech stock that you feel might still pull back to the $19 
level (8.5% from current levels of trading at $20.78).  Give into 
your craving, reduce your "frustration level," but do it with a 
lower sum of capital.  By reducing capital exposure, you can 
still "honor" that conscience, which is the NASDAQ-100 bullish % 
($BPNDX) that tells you risk is high for bullish trades in many 
4-lettered stocks that have made some sizeable moves, very early 
in what looks to be a longer-term recovery phase for the U.S. 
economy.


Jeff Bailey
Senior Market Technician


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

Nasty medicine
Russ Moore


As expected, the Fed delivered its’ eleventh rate cut this year, 
lowering the Fed funds rate to 1.75 percent. Investors reacted 
positively to the widely anticipated move with the major indices 
hitting session highs shortly after the announcement. The upside 
move hit a roadblock when drug behemoth Merck, was halted for 
trading with “news pending”. The company announced zero growth 
projected for 2002 and that had the DOW jumping on the first 
southbound train.

The blue chip index ended the session with a loss of –0.3 
percent. Tech stocks enjoyed modest gains on the day with the 
NASDAQ ending higher by +0.5 percent and the big cap NDX adding 
+1.0 percent. Volume was decent with 1.34 billion shares trading 
on the big board and 1.96 billion shares moving on the tech 
index. Market breadth was even on the NYSE while winners nosed 
out losers on the NASDAQ by a margin of 19/17.

Oil service, chemical, bank and brokerage sectors were the stars 
on the broader markets while drug, utility; airline, retail and 
airline sectors were all weak. Internet, chip, networker and 
software sectors were the best tech performers.

With only two weeks left in the year I wouldn’t expect to see a 
major move either way. Tax-loss selling should keep a lid on any 
sustained rally, and, with the possibility of a Bin-laden capture 
hanging over their heads, short sellers are unlikely to get 
overly aggressive. 


VIX 
Tuesday 12/11 close: 25.69


VXN
Tuesday 12/11 close: 50.73


30-yr Bonds
Tuesday 12/10 close: 5.55


Total Put/Call Ratio: .73


Equity Option Put/Call Ratio: .66


Index Option Put/Call Ratio:  1.48


===

NASDAQ 100 Index (NDX/QQQ)
52-Week High: 103.51
52-Week Low:   28.19
Current close: 41.23

Volume/Open Interest
Maximum calls: 40/144,616
Maximum puts : 40/117,188

Moving Averages
 10 DMA 40
 20 DMA 40
 50 DMA 36
200 DMA 40

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: 579.32

Volume/Open Interest
Maximum calls: 600/6,026
Maximum puts : 500/7,846
Moving Averages
 10 DMA  585
 20 DMA  588
 50 DMA  570
200 DMA  603

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: 1136.76

Volume / Open Interest
Maximum calls: 1150/51,305
Maximum puts : 1150/47,617
Moving Averages
 10 DMA 1145
 20 DMA 1145
 50 DMA 1109
200 DMA 1173

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:  9,888.37

Volume / Open Interest
Maximum Calls: 98/25,661
Maximum Puts   90/47,617

Moving Averages:
 10 DMA  9,912
 20 DMA  9,898
 50 DMA  9,542
200 DMA 10,128

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: 572.04

Volume / Open Interest
Maximum Calls: 620/  548
Maximum Puts:  540/1,151

Moving Averages
 10 DMA 595
 20 DMA 594
 50 DMA 549
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: 565.77

Volume / Open Interest
Maximum Calls: 520/ 577
Maximum Puts:  470/1250

Moving Averages
 10 DMA 548
 20 DMA 536
 50 DMA 487
200 DMA 559

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: 382.72

Volume / Open Interest
Maximum Calls: 400/375
Maximum Puts:  360/320

Moving Averages
 10 DMA 394
 20 DMA 395
 50 DMA 394
200 DMA 391

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, 12/07. 
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 
11/20/01     369,784   415,822   (46,038)   13.6%
11/27/01     371,336   421,405   (50,069)    8.7%
12/04/01     360,315   420,919   (60,604)   21.0%

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
11/20/01       140,507    86,861    53,646     9.8%
11/27/01       151,317    92,807    58,510     9.1%
12/04/01       159,336    86,534    72,802    24.4%

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 
11/20/01      38,042    46,446    (8,404)  (20.0%)
11/27/01      37,259    48,315   (11,056)   31.5%
12/04/01      42,191    51,426    (9,235)  (16.5%)

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
11/20/01       12,933     8,230    4,703      (7.1%)
11/27/01       12,540     8,359    4,181     (11.1%)
12/04/01       11,808     8,311    3,497     (16.4%)

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 
11/20/01      25,033    11,525   13,508     (3.1%)
11/27/01      24,243    11,496   12,747     (5.6%)
12/04/01      22,703    10,739   10,739    (15.7%)

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
11/20/01       3,609    10,565    (6,956)    (13.3%)
11/27/01       4,228    10,630    (6,402)     (8.0%)
12/04/01       3,677     9,799    (6,122)     (4.4%)
 
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        +72,336     +58,510        -60,604     -50,069

Total Open
Interest %       (+29.61%)  (+23.97%)      (-7.76%)   (-6.32%)
                 net-long   net-long       net-short  net-short


                     Small Specs             Commercials
DJIA futures     (Current) (Previous)    (Current) (Previous)
Open Interest
Net Value          -6,122     -4,228          +11,964    12,747
Total Open
interest %       (-45.43%)    (-43.09%)      (+35.78%)  (+35.67)
                 net-short   net-short     net-long    net-long


                     Small Spec              Commercials
NASDAQ 100      (Current) (Previous)    (Current) (Previous)
Open Interest
Net Value         +3,497      +4,181         -9,235    -11,056

Total Open
Interest %        (+17.38%)   (+20.01%)     (-9.86%) (-12.92%)
                 net-long   net-long      net-short net-short


What COT Data Tells Us
----------------------
Indices:.It appears the Commercial players are not ready to join 
the bull’s party just yet. For the third consecutive week we’ve 
seen the Commercials add to their net-short positions (bearish). 
More importantly, the Small Specs gobbled up more long contracts 
thereby increasing the divergence between Commercial and Small 
Spec players.

Gold: Commercials engaged in a modest reversal as they flipped 
from net-long to net-short. Current holdings do not indicate a 
directional bias.

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
12/04  2,534 contracts net-short

Data compiled as of Tuesday 12/04 by the CFTC.


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

NEW BEARISH PLAY
================

Cell Therapeutics - CTIC - cls: 24.54 chg: -0.71 stop: 26.16

Company Description
Cell Therapeutics, Inc. is committed to developing an integrated 
portfolio of oncology products aimed at making cancer more 
treatable. In addition to TRISENOX, the company is also developing 
two other compounds: PG-TXL, currently in clinical trials in the 
United States and the United Kingdom; and CT-2584, a novel anti-
cancer drug candidate in Phase II clinical trials for patients 
with cancers that have become resistant to conventional 
chemotherapy, such as soft tissue sarcoma.
(source: company press release)

Why We Like It:
We like CTIC as a bearish play for a couple of reasons.  Number 
one, the stock has completely ignored one of the strongest 
Novembers on record.  Granted the drug sector didn't do very much 
during the month, shares of CTIC were not showing any sign of 
leadership.  This weakness or lack of bullishness in the stock has 
developed into a bearish pattern where shares appear to be 
"stepping down".  In December, CTIC stepped down from its November 
trading range of $28 to $31 to trade between $27 and $29.  This 
most recent trading range was categorized by overhead resistance 
at the stock's 50-dma.  We also like CTIC as a bearish play for 
its recent sell-off on rising volume.  Three days ago (Friday), 
CTIC fell from the $28 level to $26.20.  Monday the downtrend 
continued with a close below its 200-dma.  This corresponded with 
a drop in the DRG.X drug index.  The move today was another loss 
as shares rallied to their 200-dma and then fell early in the 
morning.  The DRG.X also closed lower today and below its own 200-
dma.  It's hard to say where CTIC's eventual downside destination 
will be so we are going to aim for a short-term move to the $21.00 
level.  This is only a 14% drop and could be accomplished quickly, 
especially with the current weakness in the sector.  To start the 
play we'll initiate the strategy with a stop loss at $26.16, which 
is 10 cents over today's high.  We would want to confirm direction 
of the stock but as long as shares remain below their 200-dma 
(25.73) we should be okay.  More aggressive traders can adjust 
their exit point as needed.  We will actually close the play if 
CTIC trades to $21.00.

Picked on December 11th at $24.54 
Gain since picked:          +0.00
Earnings Date               10/22 (confirmed)








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PremierInvestor.net Newsletter                 Tuesday 12-11-2001
                                                   section 2 of 2
Copyright  2001, All rights reserved.
Redistribution in any form is strictly prohibited.

The entire newsletter is best viewed in COURIER 10 for alignment
=================================================================
To view this email newsletter in HTML format with imbedded
charts and graphs, click here:
http://www.PremierInvestor.net/htmlemail/2204_2.asp
=================================================================

In section two:

Net Bulls
  New Bullish Plays:    RATL
  Bullish Play Updates: ACRT, XMSR

Stock Bottom / Active Trader
  New Bearish Plays:    CTIC
  Bullish Play Updates: CAL, IRM
  Bearish Play Updates: MO

High Risk / High Reward

  New Bullish Play:     MCTR
  Bullish Play Updates: TDSC, MTSN, LSTR

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

============
NB New Plays
============

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

Rational Software - RATL - cls: 21.11 chg: +1.11 stop: 18.99

Company Description:
Rational Software provides a software development platform that 
improves the speed, quality, and predictability of software 
projects. This integrated, full life-cycle solution combines 
software engineering best practices, market-leading tools, and 
professional services. Ninety-six of the Fortune 100 rely on 
Rational tools and services to build better software, faster. This 
open platform is extended by partners, who provide more than 500 
complementary products and services. Founded in 1981, Rational is 
one of the world's largest software companies, with revenues of 
$796.7 million in its twelve months ended September 30, 2001, and 
3,500 employees worldwide. (sources: company press release)

Why We Like It:
The broader markets ended the day mixed but overall the closing 
numbers were not that impressive as many stocks merely drifted 
sideways.  Considering the Fed's rate cut in combination with the 
bad news from (defensive stock) drug-maker Merck, investors may 
continue to stay focused on technology stocks.  If that is true, 
then software has been a hot sector to play in.  The software 
index (GSO.X) is currently trading near 185 with support at 180 
and resistance at 190.  Additionally, the GSO.X is battling its 
200-dma at 187.  We'd like to contrast the positioning of the 
index versus shares of RATL.  RATL has been in a very strong up 
trend after it broke out above resistance near $15 in early 
November.  Since that time shares have been climbing in a narrow 
ascending channel.  Buyers have been supporting the stock and 
buying the dip near its 15-dma.  Five sessions ago, RATL broke out 
above its 200-dma and the stock recently re-tested support near 
$20 on Monday with its intra-day low of $19.90.  Here's how the 
play breaks down.  Normally, we would prefer to look for an entry 
point near its 15-dma currently at $19.00.  Unfortunately, the 
strength it exhibited today combined by the bounce off the $20 
level has us thinking the stock may trade higher first before 
testing its 15-dma again.  Therefore, we want to go long now 
(keeping one eye on the GSO.X and MSFT for leadership or 
weakness).  Traders have several choices for entries.  The 
newsletter is picking RATL here at 21.11.  However, traders that 
prefer to buy on the dip can look for dips to $20, as the stock 
performed on Monday, dips to its 200-dma and 10-dma, both 
currently near 19.55.  If the GSO.X pulls back to 180 then buying 
the dip may be the answer.   Additionally, traders can wait for 
the stock to close over $21.25, which has been short-term 
resistance for the last few sessions.  This is more likely if the 
GSO.X trades up towards 190 and even better if the index closes 
over its 200-dma.  Alternatively, you could follow our own 
preference and wait for the stock to come back to its 15-dma 
(which is close to our stop) and then look for the bounce higher.  
Speaking of stops, we will start the play with a stop at 18.99.  
This is wider than we would prefer but we would like to see the 
stock over that $21.25 level.  Once shares do close higher we'll 
probably move the stop up under its 200-dma or under support of 
$20.  The most likely spot would be under Monday's low of 19.90.  
We'll probably target an exit near $25 to $26.  

Picked on December 11th at $21.11
Gain since picked:          +0.00
Earnings Date               01/09 (unconfirmed)





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

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

Actrade Fincl. Tech - ACRT - cls: 31.95 chg: +0.08 stop: 29.45 *new*

ACRT continued its winning ways today, trading above resistance 
at 32.00 for a portion of the day and settling just beneath the 
level at the close.  While the gain was encouraging, it came on 
the lowest volume the stock has seen in four days.  Should this 
be interpreted as waning conviction or would it be more 
appropriate to attribute the lack of interest to today’s Fed 
decision?  That’s tough to call at this point, but our feeling is 
that this is a good time to tighten the stop to 10 cents below 
Friday’s low of 29.55.  If shares retrace the gains of the last 
few days and dip beneath support at 30.00, a larger sell-off 
could be in the works.  Perhaps tomorrow will help to paint a 
clearer picture.  FYI, traders looking for a new entry point may 
want to watch for a dip to $30.50 or today's low of $31.00, or in 
a broader market dip look for shares of ACRT to potentially 
bounce at $30.00.

Picked on December 9th at   30.96
Change since picked:        +0.99
Earnings Date               10/25 (confirmed)




---

XM Satellite Radio - XMSR - cls: 13.50 chg: +0.55 stop: 11.89 *new*

XMSR maintained its bullish trend, adding +4% today, finishing to 
the upside four out of the last five trading days now.  We’ve 
decided to tighten the stop on this tech play to just under the 
low on Thursday at 11.89- a level we mentioned as a possible stop 
for the more conservative trader when we first initiated the 
play.  The strong volume continues to impress us as does the 
affirmation of the bullish wedge that preceded our entry into the 
position.  A dip near 13.00 accompanied by buying interest could 
present another entry point for traders that needed to see 
additional conviction prior to going long on our initial play 
write-up.

Picked on December 9th at 12.94
Gain since picked:        +0.56
Earnings Date               N/A





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

============
AT New Plays
============

  -----------------
  New Bearish Plays
  -----------------

Cell Therapeutics - CTIC - cls: 24.54 chg: -0.71 stop: 26.16

Company Description
Cell Therapeutics, Inc. is committed to developing an integrated 
portfolio of oncology products aimed at making cancer more 
treatable. In addition to TRISENOX, the company is also developing 
two other compounds: PG-TXL, currently in clinical trials in the 
United States and the United Kingdom; and CT-2584, a novel anti-
cancer drug candidate in Phase II clinical trials for patients 
with cancers that have become resistant to conventional 
chemotherapy, such as soft tissue sarcoma.
(source: company press release)

Why We Like It:
We like CTIC as a bearish play for a couple of reasons.  Number 
one, the stock has completely ignored one of the strongest 
Novembers on record.  Granted the drug sector didn't do very much 
during the month, shares of CTIC were not showing any sign of 
leadership.  This weakness or lack of bullishness in the stock has 
developed into a bearish pattern where shares appear to be 
"stepping down".  In December, CTIC stepped down from its November 
trading range of $28 to $31 to trade between $27 and $29.  This 
most recent trading range was categorized by overhead resistance 
at the stock's 50-dma.  We also like CTIC as a bearish play for 
its recent sell-off on rising volume.  Three days ago (Friday), 
CTIC fell from the $28 level to $26.20.  Monday the downtrend 
continued with a close below its 200-dma.  This corresponded with 
a drop in the DRG.X drug index.  The move today was another loss 
as shares rallied to their 200-dma and then fell early in the 
morning.  The DRG.X also closed lower today and below its own 200-
dma.  It's hard to say where CTIC's eventual downside destination 
will be so we are going to aim for a short-term move to the $21.00 
level.  This is only a 14% drop and could be accomplished quickly, 
especially with the current weakness in the sector.  To start the 
play we'll initiate the strategy with a stop loss at $26.16, which 
is 10 cents over today's high.  We would want to confirm direction 
of the stock but as long as shares remain below their 200-dma 
(25.73) we should be okay.  More aggressive traders can adjust 
their exit point as needed.  We will actually close the play if 
CTIC trades to $21.00.

Picked on December 11th at $24.54 
Gain since picked:          +0.00
Earnings Date               10/22 (confirmed)




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

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

Continental Airlines  - CAL - close: 24.99 change: -0.30 stop: 23.75

CAL gapped up this morning after ABN Amro upgraded shares to 
"add" from "hold".  The stock, however, didn’t spend much time in 
the black as the bulls and bears played a game of tug of war for 
most of the day, resulting in a minor loss.  While we’re never 
happy when one of our positions declines in value, the last two 
days of minor pullbacks has created and even better buying 
opportunity.  Actually, our original write up discussed waiting 
for shares to pull back to the $25.00 level and CAL has done just 
that.  This could be the entry point we were initially looking 
for and as long as the stock rebounds higher from here the 
strategy is on track.  We strongly encourage readers to confirm 
the direction of the stock prior to committing capital.

Picked on December 9th at   25.77
Change since picked:        -0.78
Earnings Date               10/31




---

Iron Mountain  - IRM - close: 44.90 change: +0.00 stop: 43.25

IRM traded about 30% of its average volume today as shares moved 
sideways to close unchanged on the session.  The bullish trend is 
still in tact and now that the Fed announcement is in the books, 
perhaps the last three days of pensive trading is as well.  
Shares closed at the triple top just under 45.00 after buyers 
stepped in to pull the stock off the lows.  A bounce back above 
45.00 tomorrow on improved volume would be the more conservative 
strategy for a new entry.  More aggressive traders can look for 
dips to its 10-dma (44.35) or price support at $44.  There are 
two and a half weeks left before the stock splits 3:2.

Picked on December 6th at   45.58
Change since picked:        -0.68
Earnings Date                1/23 (unconfirmed)





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

Phillip Morris - MO - close: 45.19 change: -0.14 stop: 46.01 *new*

MO resumed its downward trend today after yesterday’s minor 
reprieve, closing at the lows of the session at 45.19.  It wasn’t 
surprising to see volume wane in the Dow component over the last 
two days, as traders awaited the announcement from the Fed, 
however, we’re a bit concerned that investors may seek respite in 
this issue now that the eleventh rate cut is in the books.  It’s 
to that end that we feel it necessary to tighten our stop on MO 
to 46.01 or just above the 10-dma of 45.98.  Shares have traded 
in a very narrow range the last few sessions, but with 
stochastics indicating that the stock is entering oversold 
territory, we think it prudent to try and lock in some gains.

Picked on December 1st at 47.17 
Gain since picked:        +1.98
Earnings Date             10/17 (confirmed)





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

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

  -----------------
  New Bullish Play 
  -----------------

Mercator Software - MCTR - close: 7.68 change: +0.53 stop: 6.84

Company Description:
Mercator Software's intelligent business integration solutions 
unify any internal operations and connect them with partners and 
customers while leveraging current technology investments. Over 
7,000 businesses, including more than 1,100 enterprise customers 
in financial services, healthcare, utilities, manufacturing, 
retail, and distribution, use Mercator software to maximize their 
performance. (source: Company Press Release)

Why We Like It:
MCTR is a turnaround success story for the fall 2001.  Shares 
languished for months between $1.50 and $3.00 over most of the 
summer.  When the market crashed in September, the selling brought 
MCTR to a low near $1.00.  However, when the market turnaround 
began in October, shares of MCTR joined the run and  have not 
looked back.  The company announced earnings on October 30th, 2001 
and the numbers were positive.  Revenue of $35M was a 20% 
improvement over the previous quarter.  The company's net loss 
narrowed from $6.1M (previous quarter) to only $1.2M.  Any CEO is 
always willing to share positive remarks about their company but 
investors were happy to hear MCTR's CEO announce that the company 
had significantly reduced their cash burn and increased their cash 
balances by the end of the third quarter.  It was only a couple of 
days later that shares of MCTR closed over its 200-dma.  Many 
readers used the 10-dma as a guide for short-term support or 
resistance.  This indicator has worked well for MCTR over the last 
two months but twice the stock has fallen through it.  It has not 
fallen through its 15-dma since it crossed over the indicator in 
early October.  Buyers were waiting again when MCTR fell to its 
15-dma on Monday.  Our biggest concern, and the concern of any 
trader would be MCTR's status of being so overbought.  
Fortunately, we feel the drop from $9 to $7 from Wednesday last 
week to Monday this week represents a 22% round of profit taking.  
This may be enough of a pull back to allow for the next leg up in 
the stock price.  Shares bounced off its 15-dma today helping 
reconfirm it as support.  We are going to add the stock today at 
7.68 and start the play with a stop at 6.84, which is a few cents 
under Monday's low.  Our goal is to exit the play near $10.  More 
conservative traders may want to wait for shares to close over the 
$8.00 level as confirmation of the new trend.  We did glance at 
the point-and-figure chart and long-term investors should aim for 
a bullish price target north of $20 but don't let that prevent you 
from applying stops to protect your capital.

Picked on December 11th at $ 7.68
Gain since picked:          +0.00
Earnings Date               10/30 (confirmed)





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

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

3D Systems Corp. - TDSC - close: 11.35 change: +0.11 stop: 10.74 

TDSC has traded in a narrowing range since we entered the stock 
on Friday as price resistance at 11.75 continues to be felt 
(yesterday and today).  We’re encouraged by the fact that the 
stock has closed at a higher low for the last two trading 
sessions, but we would certainly like to see shares finally 
capture 12.00.  TDSC opened 21 cents higher this morning, though 
the stock was unable to maintain that early conviction and merely 
added a dime for its efforts.  The bright side is that this 
consolidation should lead to a breakout in the coming days.  The 
challenge is that shares need to breakout higher above new 
resistance at its 50-dma (11.85).  We would be very cautious is 
shares trade below 11.30 - 11.20 again.

Picked on December 7th at 11.52
Change since picked:      -0.17
Earnings Date             10/17 (confirmed)




---

Mattson Tech. - MTSN - close: 8.55 change: +0.45 stop: 7.49 *new*

MTSN has closed contrary to the SOX.X over the last three days 
and it has become increasingly clear that MTSN is moving to the 
beat of its own drum.  We are very encouraged by the 5% gain 
today fueled by increasing volume.  Bulls can also cheer now that 
today's move has finally filled the gap down from September 5th.  
This ups the odds that MTSN can make a run for round number 
resistance at $10.00.  We’ve decided to raise our stop by 50 
cents to help eliminate some of the downside risk, while still 
providing room for the inherent volatility in the stock.  The 
SOX.X opened just shy of the 200-dma this morning and was 
immediately met with buying interest.  However, the close of 
565.13 for the index came as sellers sold into the Fed news.  
Support at 560 and again at 550 will likely prove to be critical 
levels for the sector and may play a role in the direction of 
MTSN despite the recent divergence of the two.

Picked on December 7th at $ 8.16
Gain since picked:         +0.39
Earnings Date              11/13 (confirmed)




---

Landstar System - LSTR - close: 72.30 change: -0.96 stop: 69.50

LSTR closed at the lows of the session though the fledgling up 
trend remains in tact.  Volume has been far from impressive the 
last two days and it’s possible that the stock’s liquidity has 
suffered as a result.  With the direct correlation between 
interest rates and the transportation industry, it’s not entirely 
surprising to see volume fall these last two days, but we would 
expect buyers to step back up to the plate now that the Fed has 
acted.  If shares trade under yesterday’s low of 71.35, the stock 
could see additional selling, stopping out those that placed 
their more conservative stops at 71.50.  More aggressive traders 
may want to look for potential new bullish entries at the 50-dma 
of 70.65.  We highly suggest waiting for the bounce to begin 
first.

Picked on December 10th at 73.26
Change since picked:       -0.96
Earnings Date               1/10 (unconfirmed)





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

RLI     RLI Corp                   43.91     +0.80
NFI     Novastar Financial Inc     15.05     +0.63

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

DCLK    Doubleclick Inc            12.15     +1.37
LGTO    Legato Systems Inc         12.07     +1.20
VAST    Vastera Inc                15.06     +1.01
NETE    Netegrity Inc              19.93     +1.92
USON    Us Oncology Inc             7.21     +1.18

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

FRX     Forest Laboratories Inc    74.60     +1.35
SANM    Sanimina                   25.60     +2.10
LAB     Labranche & Co             35.11     +1.07
TRI     Triad Hospitals            28.00     +1.89
SLAB    Silicon Laboratories Inc   34.65     +2.10
TBL     Timberland Co              36.21     +1.56

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

MRK     Merck & Co                 60.70     -6.29
V       Vivendi                    50.60     -1.20
GM      General Motors Corp        48.65     -1.69
DUK     Duke Energy Corp           33.92     -2.24
SWY     Safeway Inc                41.44     -1.78

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

EK      Eastman Kodak Co           30.97     -0.77
ADBE    Adobe Systems Inc          33.98     -1.74
WFMI    Whole Foods Market Inc     42.57     -1.66
STK     Storage Technology Corp    20.98     -1.40





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