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Daily Newsletter, Wednesday, 12/12/2001

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PremierInvestor.net Newsletter              Wednesday 12-12-2001
                                                  section 1 of 2
Copyright  2001, All rights reserved.
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In section one:

Market Wrap:      Is it too late to invest in tech?
Watch List:       ENZN, BEAS, TEVA, MANU, RYL, OSIP
Market Sentiment: Late day rebound.
Play-of-the-Day:  P-n-F Triple Top Breakout!

-----------------------------------------------------------------
U.S. Market Numbers
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MARKET WRAP  (view in courier font for table alignment)
-----------------------------------------------------------------
      12-12-2001          High     Low     Volume Advance/Decline
DJIA     9894.81 +  6.44  9919.72  9806.10 1.42 bln   1520/1625	
NASDAQ   2011.38 +  9.45  2022.76  1975.65 1.86 bln   1855/1744
S&P 100   580.37 +  1.05   582.56   574.33   Totals   3375/3369
S&P 500  1137.07 +  0.31  1141.58  1126.01
RUS 2000  475.31 +  0.54   476.32   470.99
DJ TRANS 2580.28 -  6.31  2591.70  2561.87
VIX        25.45 -  0.24    27.38    25.14
VXN        48.09 -  2.64    51.36    48.09
TRIN        1.07
Put/Call    0.64
-----------------------------------------------------------------

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

Is it too late to invest in tech?

I think we've found a semiconductor stock that is poised for a 
bull market that even the wildest of bulls can't imagine.  This 
trade is based off of a stock I traded years ago.  It all started 
with some "unusual volume" the occurred when this semiconductor 
equipment stock looked as if it were going down the proverbial 
toilet.  I'll never forget this event and what took place the 
following weeks, months and years.

GaSonics International - Chart as of 10/08/1998




I had a prior trading history with GaSonics International 
(formerly NASDAQ:GSNX).  It was a "semiconductor equipment" stock 
that a client had received some type of investment newsletter on 
that we had bought years ago as the technicals near $15 seemed 
bullish and the "value" newsletter was also bullish.  The stock 
worked out well for the client and we eventually sold the stock 
near $20 for a decent gain when the technicals began breaking 
down.  There were also some other stocks in the sector like 
Applied Materials (NASDAQ:AMAT) that were breaking down on their 
charts so we thought it best to take profits and move on.

In early October of 1998, some semiconductor equipment stocks 
started to show some life.  Even some of the chipmakers like 
Intel (NASDAQ:INTC) were showing signs of bullishness and 
starting to get above its 200-day moving average after a 
prolonged downtrend in the semiconductor cycle.  There was 
something suspicious about that volume spike on GaSonics and I 
needed to make a call to the company.

Long story short.  I got the receptionist and she spilled her 
guts to me.  Turns out they were starting to see some business 
and were actually opening up some production lines and hiring 
back some workers.  A major institutional firm had been in their 
offices recently and mentioned something about providing coverage 
of the company, but wanted to meet with management first.

Well... that was enough for me to at least put the stock on my 
watch list.  I wasn't sold yet, but if she was telling me the 
truth, then I and my clients might be interested if the stock got 
above $5.  I made some calls to my more aggressive technology 
stock traders and told them of the unusual volume spike and some 
of my research.  Here's what the chart looked like a couple of 
weeks later.

GaSonics International Chart - Chart as of 10/20/1998




Giving clients the "heads up" on a potential move turns out to be 
a rather easy sale.  A good story along with confirmation from 
the technicals unfolding in the direction of bullish fundamental 
research gives investors some confidence to be bullish.

GaSonics International Chart - Weekly interval to buyout




Like I said... I had some history with GSNX and remembered 
selling the stock at $20 years ago for a small profit.  The jump 
in January of 2000 on strong earnings at a level just above $20 
was more than I could take.  There was no way the stock was going 
much higher too much higher.  Wow!  While we were "right" at $5, 
we were not necessarily right at $22.  Nobody complained.

Do you believe in miracles?

As yourself not "do you believe in miracles," but ask yourself 
"do you believe in history and cycles in the semiconductor 
sector?"  Here's a stock that reminds me of GaSonics back in 
October of 1998.  There's something about volume spikes, upward 
moves, and semiconductor stocks that intrigues me!

TranSwitch Corporation Chart - 




Four sessions ago, shares of TranSwitch Corporation (NASDAQ:TXCC) 
traded 15.4 million shares and the stock jumped 35%!  Is this 
stock "overextended" on its chart?  I don't think so.  Is the 
upward trend "reasonable" compared to some trends we've seen 
recently?  I think so.  Is this stock showing any type of 
relative strength vs. the S&P 500 that might have us believing 
the stock is beginning to outperform the market?  I think so!

Relative Strength of TXCC vs. S&P 500




On December 7th, the sharp move higher in TXCC had the relative 
strength chart giving a "buy signal."  Today's $0.49 gain 
(+9.29%) has the RS chart just now reversing back into a column 
of X.

As I told clients back in October of 1998, "Let's dip our toe in 
the water with a partial position.  If the stock shows further 
bullishness, we can always add to it later."  If you get a 
chance, take a look at the regular point and figure chart of 
TXCC.  What you'll find is the stock just recently gave a 
"triple-top" buy signal at $6.00.  Bearish resistance trend is 
still negative (thus caution and partial positions only) at up 
ahead at $15.

Looking ahead

Stocks performed well today when you consider most of the major 
averages finished in positive territory.

Are you following those disk drive stocks and the Disk Drive 
Index (DDX.X)?  Wow!  Up another 3.8% today and traded strong all 
session.  This bodes quite well near-term for other technology 
stocks to see a strong group continue to move higher.  We don't 
necessarily have to play the group if the stocks just look 
overextended, but it gives further confirmation that somebody 
seems to know something that's bullish in the computer components 
sector.

Last night we looked at Proctor & Gamble (NYSE:PG) and that stock 
traded strong on last night's guided higher earnings.  The stock 
jumped $3.25 (+4.23%) and traded at the $80.  Encouraging is the 
fact that the stock traded heavy volume of 8.3 million shares.  
Up until now, we may have seen the stock move higher from "value" 
players buying the stock.  Today's heavy volume and upward price 
movement hints that some growth players may now be coming to the 
table.  Remember that large spike higher in shares of GaSonics on 
the weekly chart show above when the stock rocketed from the 
$20's to $40's?  That was when growth guys started coming into 
the stock on confirmation exceeding earnings.

Would it surprise you to think that a large-cap growth fund 
holding a position in Merck (NYSE:MRK) $58.25 -$2.18 (-3.59%) is 
dumping that stock and rotating some cash toward PG?  Merck 
traded 32.8 million shares today.  Most likely some "value" 
players perhaps rotating out of PG on the good news and now 
starting to pick up some long-term holdings in Merck or even 
little old TranSwitch!  I'm all for some long-term holdings like 
Merck, but personally; I like to see a stock gain a little bit of 
favor before trying to "pick the bottom", like TranSwitch.

In 1986 Al Rizzo said, "When a falling stock becomes a screaming 
buy because it cannot conceivably drop further, try to buy it 30% 
lower."

Bond market action was interesting today.  Today we saw selling 
in the shorter-end and the 13-week ($IRX.X) as YIELD there moved 
higher to 1.64%.  It's interesting to see some selling here just 
after the Fed lowered interest rates to 1.75%.  We might see this 
YIELD continue to see some selling, especially if the bond market 
thinks the Fed is done lowering rates.  As we step out in YIELD 
the 5, 10 and 30-year all saw buying as YIELDS their dropped.  An 
interesting YIELD close on the 10-year at 4.974%.  Within a 
"frogs hair" of the 200-day moving average of 4.972%.

I do think today's bond market action was some rotation from the 
lower YIELDing 13-week that laddered out into the higher YIELDing 
Treasuries.  On a gradual basis, I think this is OK.  For a good 
rally in stocks, we want to see those institutions holding these 
longer-term bonds spit them out after the recent new relative 
high in YIELD.  Believe me... these fund managers that run some 
of the balanced funds that include stocks and bonds know what is 
performing and what isn't.  If they've been holding some Treasury 
paper in the past month, they've most likely seen a decline in 
capital on those bonds and seen some increasing stock prices.  
Some good news like that from Proctor & Gamble (PG) on earnings 
growth may have them starting to think long and hard about 
Treasury bonds.

I don't know about you, but tomorrow morning I'm going to be 
watching the 10-year bond YIELD closely.  If we were to see a 
rejection of this bond and YIELD jump higher from current levels 
(caused by selling) like we saw on December 5th (the NASDAQ 
jumped 83 points or 4.2%) then bulls could see a very good day of 
trading.  If you're a short-term trader that "missed" the bullish 
day on December 5th, the please review our December 4th market 
wrap regarding the 10-year YIELD!

What I feel is encouraging for another December 5th type of rally 
the late day comeback in the NASDAQ and broader market averages 
after the close of the bond market!  Remember... the 10-year 
YIELD closed right near its 200-day moving average and a level of 
retracement at 4.98%.  Look what the NASDAQ Composite did in 
regards to our retracement bracket.

NASDAQ-Composite Index Chart - 




I think the late day rally after the bond market closed my have 
been due to "fearful" bears saying, "$*@#(%, that YIELD didn't 
break below the 200-day and could now be rejected higher in the 
morning.... this darned market just won't die" and there was some 
short-covering into the close for stocks.

Tomorrow morning, if we get any type of follow through with the 
stock futures and the longer-term bond averages are higher, then 
we could very well have a bullish equity session.

I look forward to tomorrow and can't wait to see how things turn 
out.

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.

----------

Enzon Inc - ENZN - close: 53.59 change: +0.09

WHAT TO WATCH: ENZN mirrored the BTK.X for most of the day, 
participating in the early sell off and then seeing strong 
bullish volume in the latter half of the session.  This volume 
could be contributed to some positive comments by one broker who 
felt the weakness in ENZN was a chance to buy on the dip.  The 
low today was a bounce off support at $50 which supported the 
stock in mid-July.  Overall the stock is looking rather weak and 
the BTK.X could see more profit taking but the sharp rebound 
would make us think twice about shorting the stock.  Watch for a 
close under $50 if you're bearish.  Bullish traders have a lot of 
price congestion to fight through between $55 and $60.




---

BEA Systems - BEAS - close: 17.28 change: +0.50

WHAT TO WATCH: BEA Systems CEO Alfred Chuang stated today that 
business has improved over the last 2 months and he anticipates 
an economic recovery in the second half of 2002.  At that point, 
he believes revenue will grow at a 30% clip.  The stock responded 
with a minor bounce that pushed shares above the 10-dma.  BEAS 
has been range bound these last several weeks while other 
software issues have been trading higher.  A look at relative 
strength for BEAS vs. the GSO.X software index shows the stock 
has been under performing for most of December but today's bounce 
is encouraging.  We would want to see two consecutive closes 
above the $18 level to convince us the trading range may be 
broken (to the upside).  We'll have to re-evaluate when this 
occurs.




---

Teva Pharmaceuticals - TEVA - close: 55.34 change: -0.45

WHAT TO WATCH:  We've highlighted TEVA on the watch list before 
and it doesn't appear that shares have improved any since.  
Actually, the stock is lower and the overriding bearish trend is 
still very much intact.  We wanted to add TEVA to the watch list 
this evening due to the stock's proximity to its significant 
support level.  $53.50 was the low back in mid-September and 
shares are fast approaching this level of support again.  A 
breakdown below this level would be a very big vote of no 
confidence in the stock.  Shareholders should already be 
concerned with TEVA's breakdown below the $56 level.  What may 
give them hope was the stock's doji candlestick pattern today.  
It may indicate a potential reversal and end to the downtrend (at 
least temporarily).  Bullish traders should look for confirmation 
first and expect resistance at $56, $58, $60 and its 200-dma 
(61.18).  TEVA could go either way and both the bulls and the 
bears will be paying close attention.




---

Manugistics Group - MANU - close: 17.80 change: +2.35

WHAT TO WATCH: Strong volume poured into MANU today, taking the 
stock 15% higher on the session despite W.R. Hambrecht starting 
the stock at a "neutral".  Today’s breakout comes after five days 
of sideways consolidation that took place immediately after the 
stock shot higher on December 4th.  Bullish resistance exists at 
round number price resistance of 20.00 which will be strengthened 
by MANU's 200-dma at 20.28.  The close above resistance between 
16.25 and 16.50 as well as closing at its high for the day is 
very bullish for tomorrow and shares might be able to trade to 
$20 in the near term for a sizeable gain.  However, we advise 
strong caution as chasing stocks already up 15% in one day can be 
hazardous to your trading account.  




---

Ryland Group - RYL - close: 67.00 change: +3.30

WHAT TO WATCH: Shares of homebuilders took off today as Toll 
Brothers soundly beat the street’s earnings expectations by 20 
cents.  With falling mortgage rates and a quicker than expected 
recovery following the September 11th slowdown, RYL closed above 
resistance to finish at 67.00 after its second consecutive day of 
increasing volume. Support appears to have been formed at the 
previous resistance level 62.70 (62.50).  Investors who believe
the momentum in the home sector will continue may want to 
investigate further.  We would expect shares to rally to the $70 
- $72.50 level before encountering resistance again.




---

OSI Pharmaceuticals - OSIP - close: 41.19 change: -2.40

WHAT TO WATCH: Another potential bearish play on the 
pharmaceutical sector is OSIP.  Shares of OSIP have lost critical 
levels of support in the last few trading sessions including 
today’s close below its 50, 100, and 200-dma.  The volume today 
was very strong at 958K.  The question is whether bulls will try 
and step in to support the stock at $40 (the intraday low today 
was 40.20) or whether shares will continue to fall to $37.50 and 
beyond.  The MACD is negative and obviously starting to grow 
steeper.  Look for a failed rally back to its 200-dma or a close 
under $40.  






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

Late day rebound.
by Russ Moore

The DOW fell victim to another major warning but managed to turn 
things around in the late going and end with a fractional gain of 
+0.5 percent.

Financial services giant American Express warned that fourth 
quarter earnings would fall short of expectations and that it 
would be laying off another 5,500 workers. The warning came on 
the heels of yesterday’s announcement by drug giant Merck, and 
that was enough to send the buyers to the sidelines in the early 
going.

The tech side enjoyed some late day interest and that helped push 
the NASDAQ to a +0.5 percent gain. The NDX added +0.5 percent. 
Volume was steady with 1.40 billion shares trading on the NYSE 
and 1.85 billion shares moving on the NASDAQ. Losers sneaked past 
winners by a 16/15 margin on the NYSE while winners edged losers 
by an 18/17 count on the tech index.

Broader market action saw utility, oil, airline and gold sectors 
all up on the session. Tech sectors were all in the green except 
for a small loss in the networking area.

As noted last night, a strong move by either side will be 
difficult to achieve over the next two weeks. That should leave 
us with several sessions of intraday chop leading up to the New 
Year.



VIX 
Wednesday 12/12 close: 25.45


VXN
Wednesday 12/12 close: 48.09


30-yr Bonds
Wednesday 12/12 close: 5.45


Total Put/Call Ratio: .91


Equity Option Put/Call Ratio: .77


Index Option Put/Call Ratio:  1.71


===

NASDAQ 100 Index (NDX/QQQ)
52-Week High: 103.51
52-Week Low:   28.19
Current close: 41.56

Volume/Open Interest
Maximum calls: 40/145,223
Maximum puts : 40/119,492

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: 580.37

Volume/Open Interest
Maximum calls: 600/6,487
Maximum puts : 500/7,905
Moving Averages
 10 DMA  586
 20 DMA  587
 50 DMA  571
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: 1137.07

Volume / Open Interest
Maximum calls: 1150/52,373
Maximum puts : 1150/56,771
Moving Averages
 10 DMA 1146
 20 DMA 1145
 50 DMA 1111
200 DMA 1172

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:  9,894.81

Volume / Open Interest
Maximum Calls: 98/25,695
Maximum Puts   90/47,616

Moving Averages:
 10 DMA  9,930
 20 DMA  9,905
 50 DMA  9,561
200 DMA 10,124

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: 560.54

Volume / Open Interest
Maximum Calls: 620/  573
Maximum Puts:  540/1,151

Moving Averages
 10 DMA 591
 20 DMA 593
 50 DMA 551
200 DMA 557

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: 575.62

Volume / Open Interest
Maximum Calls: 520/ 574
Maximum Puts:  470/1250

Moving Averages
 10 DMA 554
 20 DMA 538
 50 DMA 491
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: 378.07

Volume / Open Interest
Maximum Calls: 420/406
Maximum Puts:  360/320

Moving Averages
 10 DMA 392
 20 DMA 394
 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 (Bullish)
=========================
(new High Risk/High Reward play)

TranSwitch - TXCC - close: 5.76 chg: +0.49 stop: 4.98

Company Description:
TranSwitch Corporation, headquartered in Shelton, Connecticut, is 
a leading developer and global supplier of innovative high-speed 
VLSI semiconductor solutions - Connectivity Engines (TM)- to 
original equipment manufacturers who serve three fast-growing 
end-markets: the Worldwide Public Network Infrastructure, the 
Internet Infrastructure, and corporate Wide Area Networks (WANs). 
Combining its in-depth understanding of applicable global 
communication standards and its world-class expertise in 
semiconductor design, TranSwitch Corporation implements 
communications standards in VLSI solutions which deliver high 
levels of performance. Committed to providing high-quality 
products and service, (source: Company Press Release)

Why We Like It:
We should emphasize that this play is certainly high risk in 
nature.  First, and foremost, a minor move in the stock 
constitutes a significant percentage change and with the inherent 
volatility associated with tech, anything is possible.  TXCC has 
been beaten down to a shadow of its former self since trading at 
a 52 week high of 55.75 almost one year ago.  Now that the 
majority of well known semiconductor stocks have rebounded from 
steep declines, we thought we would search for a few that had yet 
to bounce back in similar fashion.  TXCC is one such stock.  Last 
week on December 7th shares of TXCC rocketed higher on volume not 
seen in quite some time.  Average volume for the stock is only 
2.75M a day.  Last Friday saw 15.4M shares traded while the share 
price ran from $4.70 to close at $6.34.  The ensuing 
consolidation appears to have bottom forming short-term support 
that could be the base of future moves.

The big move last Friday produced a triple-top breakout in TXCC's 
point-and-figure chart, which is a very bullish pattern.  This 
breakout tells us that TXCC could see a significant move in the 
coming days as traders unwind their positions in first tier semi 
stocks and move capital to second tier issues such as TXCC (plus 
there is the additional buying pressure from bears covering their 
short positions).  Our stop on this play is at 4.98, 20 cents 
under yesterday’s low and our bullish price target is 9.00.  
This represents a risk/ reward ratio that is roughly 3.5 to 1.  
Make sure to take a look at Jeff’s market wrap this evening 
entitled "Is it too late to invest in tech".  In his piece Jeff 
highlights the merits of this high risk play, elaborating with 
the graphical representations that we have consulted.

Picked on December 12th at $ 5.76
Change since picked:        +0.00
Earnings Date               01/16 (unconfirmed)






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

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

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



PremierInvestor.net Newsletter               Wednesday 12-12-2001
                                                   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/5125_2.asp
=================================================================

In section two:

Net Bulls
  Bullish Stop Adjsutments: RATL

High Risk/Reward
  New Bullish Play:         TXCC
  Bullish Stop Adjsutments: MCTR


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 Stop Adjustments
===================

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

Rational Software - RATL - cls: 23.00 chg: +1.89 stop: 19.98 *new*

We were happy to see shares of RATL continue strongly higher in 
Wednesday's trading.  A quick glance at the news did not turn up 
anything worthwhile.  Therefore we looked at the GSO.X software 
index.  The index was up marginally but managed a fractional 
close over its 200-dma (less than a point below it now).  With no 
real movement in the index we decided to glance at MSFT, the 
largest component of the GSO.X.  MSFT was also up fractionally 
but the software giant did rally very sharply off its lows of the 
day (near 66.25) to close at 67.94.  The buying pressure all came 
in the last hour of trading for MSFT unlike RATL which merely 
continued its up trend from yesterday.  We are encouraged that 
RATL closed at its high for the day, which is a bullish indicator 
for tomorrow's open.  RATL's volume was strong as well at 7.4M 
shares.  Now that shares are clearly over the resistance and 
price congestion between $20.50 and 21.25 this area should act as 
support.  More conservative traders can use this to adjust their 
stops.  We are only raising ours to $19.98 and will adjust it 
higher again once we have a 10% gain under our belt.  





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

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

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

TranSwitch - TXCC - close: 5.76 chg: +0.49 stop: 4.98

Company Description:
TranSwitch Corporation, headquartered in Shelton, Connecticut, is 
a leading developer and global supplier of innovative high-speed 
VLSI semiconductor solutions - Connectivity Engines (TM)- to 
original equipment manufacturers who serve three fast-growing 
end-markets: the Worldwide Public Network Infrastructure, the 
Internet Infrastructure, and corporate Wide Area Networks (WANs). 
Combining its in-depth understanding of applicable global 
communication standards and its world-class expertise in 
semiconductor design, TranSwitch Corporation implements 
communications standards in VLSI solutions which deliver high 
levels of performance. Committed to providing high-quality 
products and service, (source: Company Press Release)

Why We Like It:
We should emphasize that this play is certainly high risk in 
nature.  First, and foremost, a minor move in the stock 
constitutes a significant percentage change and with the inherent 
volatility associated with tech, anything is possible.  TXCC has 
been beaten down to a shadow of its former self since trading at 
a 52 week high of 55.75 almost one year ago.  Now that the 
majority of well known semiconductor stocks have rebounded from 
steep declines, we thought we would search for a few that had yet 
to bounce back in similar fashion.  TXCC is one such stock.  Last 
week on December 7th shares of TXCC rocketed higher on volume not 
seen in quite some time.  Average volume for the stock is only 
2.75M a day.  Last Friday saw 15.4M shares traded while the share 
price ran from $4.70 to close at $6.34.  The ensuing 
consolidation appears to have bottom forming short-term support 
that could be the base of future moves.

The big move last Friday produced a triple-top breakout in TXCC's 
point-and-figure chart, which is a very bullish pattern.  This 
breakout tells us that TXCC could see a significant move in the 
coming days as traders unwind their positions in first tier semi 
stocks and move capital to second tier issues such as TXCC (plus 
there is the additional buying pressure from bears covering their 
short positions).  Our stop on this play is at 4.98, 20 cents 
under yesterday’s low and our bullish price target is 9.00.  
This represents a risk/ reward ratio that is roughly 3.5 to 1.  
Make sure to take a look at Jeff’s market wrap this evening 
entitled "Is it too late to invest in tech".  In his piece Jeff 
highlights the merits of this high risk play, elaborating with 
the graphical representations that we have consulted.

Picked on December 12th at $ 5.76
Change since picked:        +0.00
Earnings Date               01/16 (unconfirmed)






===================
HR Stop Adjustments
===================

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

Mercator Software - MCTR - cls: 8.35 chg: +0.67 stop: 7.19 *new*

MCTR is another software stock on our play list that is up over 
8% today.  Shares have rallied back above their 10-dma and the 
stock appeared to find support at the $8.00 level.  If you were 
waiting for that close over $8.00 this is it.  The company came 
out with a press release today about additional funding through a 
private sale of 2.2M shares to a group of institutional investors 
as well as new and improved banking credit.  We have added an 
excerpt from the press release below but the rally today was 
probably fueled by strong moves across the software industry. 
Conservative investors can consider moving their stops just below 
today's low of $7.96.  We feel that is a bit too close for a high 
risk/high reward play and will move ours from 6.84 to 7.19, which 
is a few cents below MCTR's 15-dma.  We're still aiming for $10 
but have not yet decided if we'll close the play there or not.

Below is an excerpt from the MCTR press release:

  Today announced that it has raised $16 million in additional 
  equity financing through the private sale of approximately 
  2.2 million shares of Mercator common stock to a group of 
  institutional investors. 
  
  Additionally, Mercator modified an existing bank credit 
  facility to reflect improved financial circumstances and 
  recent overall strong performance, including a third quarter 
  featuring 20% sequential revenue growth and the elimination 
  of the company's cash burn. The additional financing will be 
  used as working capital to support accelerated growth 
  strategies.  
  
  Mercator Chairman and CEO Roy C. King said, "With this 
  transaction we have achieved all three goals set at the 
  beginning of the year: re-structuring Mercator for a 
  return to profitability; revitalizing our technology, 
  including delivering industry specific solutions; and 
  clearly demonstrating our corporate viability by securing 
  additional growth capital. We have done all three; it's a 
  powerful message to our customers, shareholders, and 
  employees."  






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

VSH     Vishay Intertechnology     21.22     +0.56
ESV     Ensco Intl                 22.10     +0.70
CTX     Centex Corp                54.60     +4.02
LEN     Lennar Corp                41.07     +2.43
NVR     Nvr Inc                   194.00     +4.65

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

ASTSF   Ase Test Limited           13.73     +1.35
SNDK    Sandisk Corp               18.21     +1.99
MANU    Manugistics Group          17.80     +2.35
OO      Oakley Inc                 16.30     +2.25
ENDP    Endo Pharmaceuticals       10.99     +1.22

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

PG      Procter & Gamble Co        79.95     +3.25
VRTS    Veritas Software           44.42     +1.77
FRX     Forest Laboratories        76.80     +2.20
NTAP    Network Appliance Inc      23.59     +2.22
RATL    Rational Software          22.94     +1.83

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

SGP     Schering-Plough Corp       36.86     -1.79
MRK     Merck & Co                 58.52     -2.18
LLY     Eli Lilly & Co             79.01     -1.39
BMY     Bristol-Myers Squibb Co    50.45     -3.30
WAG     Walgreen Co                30.98     -1.02

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

AVB     Avalongbay Communities     48.47     -0.77
VLO     Valero Energy Corp         35.94     -1.61
TNB     Thomas & Betts Corp        21.17     -0.23
TRN     Trinity Industries Inc     26.82     -0.41
EME     Emcor Group                42.80     -4.26






=================================================================
To stop receiving this PremierInvestor.net Newsletter,
send email to Contact Support
=================================================================
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

*****************************************************************
ADVERTISING INFORMATION

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Newsletter, or any Premier Investor Network newsletter please
contact Contact Support.

*****************************************************************


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




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