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Daily Newsletter, Wednesday, 12/19/2001

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PremierInvestor.net Newsletter              Wednesday 12-19-2001
                                                  section 1 of 2
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In section one:

Market Wrap:      Some Honey Trades In the Making
Watch List:       SCH, PXLW, CCBL, MANU, BJS, AOL, FLEX
Market Sentiment: Mixed news delivers mixed markets
Play-of-the-Day:  When the Chips Are Down

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U.S. Market Numbers
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MARKET WRAP  (view in courier font for table alignment)
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        12-19-2001        High      Low     Volume Advance/Decline
DJIA    10070.50 + 72.10 10088.30  9919.80 1.45 bln   1528/1643
NASDAQ   1982.80 - 21.90  2007.76  1971.07 1.90 bln   1605/2059
S&P 100   588.72 +  5.34   590.25   580.10   totals   3133/3702
S&P 500  1149.56 +  6.64  1152.44  1134.75           
RUS 2000  482.07 -  3.42   485.49   480.02
DJ TRANS 2644.66 - 12.61  2662.08  2632.30
VIX        23.57 -  0.59    25.01    22.90
Put/Call Ratio      0.61
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===========
Market Wrap
===========

Some "honey" trades in the making

I'm not going to steal the thunder of our play writers, but I 
think subscribers are in for some "honey" trades in the coming 
weeks.  Some of these stocks have "ludicrous" bullish vertical 
count price objectives that the market is hinting at.  If the 
trades work out like I think they will, then subscribers should 
have an excellent start to 2002.

The bond market has now seen a couple good days of buying and the 
10-year YIELD has dropped from a Monday high YIELD of 5.385% to 
today's closing YIELD of 5.036%.  Last week we saw this YIELD 
firm up at 4.98% and I think equity bulls want to see that hold.  
Some of the liquidity reports I'm getting from TrimTabs is 
showing sizable amounts of money coming back into mutual funds.  
I'm guessing these equity inflows are those that came out near 
SPX $1,150, saw SPX $1,175 and the recent pullback not turn into 
a 10% decline.

Speaking of the S&P 500 Index ... Today's trading at $1,150 was 
enough to get our point/and figure chart back into a column of 
X's.  I feel this is bullish based on commentary from Thursday, 
December 13th's market wrap.  Tomorrow could be quite bullish.  
Resistance on the S&P 500 remains to be the 1,175 level.  I'd 
continue to pick away at some bullish trades and follow with some 
rather tight stops.

Psychology should be positive as the Dow Industrials closed above 
the 10,000 level at 10,070.  Technical resistance remains the 
200-day moving average now at 10,109.  If bulls are going to 
press things higher, then tomorrow is as good a day as any.

Look for some decent sector moves from transportation stocks on a 
Dow Jones Transport Average (TRAN) break above $2,670.  Software 
stocks look to be near a breakout, but bulls need to see a GSTI 
Software Index (GSO.X) close above $192 for confirmation.

Oil Service stocks broke out of that wedge we talked about in 
past updates.  Today as the OSX.X jumped 4.6% to $84.47.  Today's 
close came right near its session high of $84.72.  In past 
updates, we've talked about the bullish technicals in shares of 
BJ Services (NYSE:BJS).  The stock jumped back above the 200-day 
MA again today and saw good volume on the rise.  That's twice now 
and this stock looks to be a leader in the group.

Small Cap action

My guess is that one of our "High Risk/Rewards" trades lulled 
some traders too sleep, but today's 8.6% gain for 3D-Systems 
(NASDAQ:TDSC) finds the stock moving from "limbo stage" (see 
yesterday's update) to Charo singing dance tunes in the 
background.

3D Systems Corporation -




In December 6th's "market wrap" we noted the Russell 2000 Index 
(RUT.X) had closed above its 200-day moving average.  We also 
posed the question, "Are market makers getting a buy side bias?"  
With 3D Systems trading at the lower end of a retracement range 
and having just witnessed a small volume "spike" just above a 
level of retracement where a market maker might be lurking and 
trying to build some inventory, we thought this stock might be 
worth a shot near $11.52 for our more aggressive bullish traders.  
The break above the 50-day MA is something this stock has been 
unable to do until today.  Next hurdle now becomes retracement at 
$12.66, then downward trend near $13.25.  One step at a time.

I don't think we can say that this one stock alone is finite of 
how a trader can get a feel for how market makers may be getting 
a buy side bias, but for me, it is a sign that bulls can begin 
getting a little more confident in buying some pullbacks in 
stocks where we feel market makers will most likely be looking to 
replenish some inventories after a stock has made a nice move 
higher and the buying from that move had the market maker selling 
his/her inventory and should now be looking to firm up some bids 
and add to inventory once again.

AT&T and Comcast agree on broadband unit

After the close of today's trading AT&T (NYSE:T) announced it 
would sell its cable TV unit to Comcast (NASDAQ:CMCSK) for a 
whopping $72 billion, which includes the assumption of $20 
billion in AT&T debt.  Comcast will also assume liability for 
about $5 billion in special convertible preferred bonds held by 
Microsoft (NASDAQ:MSFT).

AT&T (NYSE:T) $16.80 +0.9%:  AT&T is a stock we've mentioned more 
than once in recent weeks.  Tonight's blockbuster deal with 
Comcast will find AT&T loosing an "asset."  Some players argue 
that AT&T's delve into the cable business had the company 
spending roughly $100 billion over a two-year period and never 
was able to realize its potential and mesh the technology with 
its phone business.  Tonight's deal will have AT&T erasing about 
$40 billion in long-term debt.  It's unclear as to how the market 
will respond to tonight's announcement.  The positives will most 
likely bee seen from the vastly improved balance sheet, while the 
potential "growth" story may have lost its shine from what many 
feel was a highly coveted asset with great potential.  
Nonetheless, AT&T has not been able to leverage that asset and 
gain from it, so they're getting rid of it.

AT&T shareowners will end up with a 56% economic stake and about 
a 66% voting interest in the newly formed company.  T 
shareholders would receive value equivalent to $13.07 per T share 
based on CMCSK's ($38.07) closing share price on December 19th, 
while retaining complete ownership of T's traditional 
communications business.  The "new company" is to be called AT&T 
Comcast Corporation.

Comcast Corp. (NYSE:CMCSK) $38.07 -2.6%:  Comcast was the first 
to knock on AT&T's door back in July regarding T's broadband 
unit.  In July, Comcast made what looks to be a "low ball" bid of 
$44.5 billion offer.  T rejected the offer as "too low."  
Tonight's agreement has Comcast now the #1 player in the nation's 
cable business.  AT&T was the #1 player with almost 14 million 
subscribers, AOL Time Warner was #2 with about 12 million users, 
Comcast #3 with about 8.4 million and Cox was #5 with 6.2 
million.  Tonight's deal upon completion will have Comcast in a 
solid #1 with over 22 million subscribers.  Almost double that of 
now #2 player AOL Time Warner (NYSE:AOL).

Some argue that AT&T knows voice, while Comcast is truly in the 
media business and will be better positioned to understand and be 
able to harness the asset.  The question for many is "did they 
pay too much?"  If you're a subscriber to AT&T's cable business 
like I am, then I assume I'm worth about $5,142.86 to Comcast as 
a customer ($72 billion divided by 14 million subs).  If I 
remember correctly, my cable bill is about $40 a month, $480 per 
year (wait, I think I read my bill was going to increase 10% in 
January).  Anyway, you get the picture.  Even at $500 per year, 
it may take a while until Comcast recoups all of today's deal.  
But that's big business.  Most of us are thinking about what is 
going to happen in the market tomorrow or next year.  
Corporations are looking out several business cycles.  At least 
the good ones are.  I'd sit back on this one for awhile and judge 
market response.

AOL Time Warner (NYSE:AOL) $33.00 +0.85%:  Now here might be a 
play for a bullish trade.  PremierInvestor.net had actually 
profiled shares of AOL Time Warner (NYSE:AOL) as bullish back on 
November 6th in the "High Risk/Reward" section of our play list 
at $33.15.  The trade was working in a bulls favor at $38.25 when 
it was made public that AOL Time Warner was sending in a bid 
proposal to AT&T for the broadband unit.  Not only was Comcast a 
bidder along with AOL, but Cox Communications (NYSE:COX) was also 
submitting a bid.  We immediately felt that this might trigger a 
bidding war and suggested that traders raise stops in the trade 
to $36.90 as the MARKET could potentially put some selling 
pressure on the stock in fears of a bidding war.  Now that T has 
accepted Comcast's bid, that "cloud" of selling pressure may well 
be lifted.

Based on "past trading" experience with a bullish trade above 
$35.10 and gain from stop, I think this is a stock worth taking a 
look at once again.  There was nothing "technically" bearish that 
had us tightening our stop to profitability.  It was the concern 
over a pending bidding war taking place.  While AOL Time Warner 
(AOL) will remain the number 2 player in the cable business, 
they've also dropped considerably back in the number of 
subscribers compared to combined T-broadband/Comcast.  Should AOL 
get back above the $35.10 level, I'd consider that a bullish 
response from the MARKET.

Cox Communications (NYSE:COX) $38.39 -1.36%:  I'm not sure COX 
was ever a serious bidder for T's assets.  There's very little 
technically that I find compelling for a trade here.  In fact, I 
don't find anything compelling about the stock.  Should we see 
AOL decide to make itself bigger, we could see COX become a 
takeover candidate by AOL, but that's a bet I as an investor 
don't like to make.

Fascinating

I find the evolution that businesses go through fascinating.  I 
used to work in the "oil patch" for Mobil Oil, now Exxon/Mobil.  
As a Mobil employee, we loved nothing more that to try and 
outperform Exxon every year.  Sometimes we'd succeed, other times 
not.  They were our rival.  I would have never thought the two 
would become one.

At Mobile, we would "restructure" about every two years.  For the 
most part, keeping things small seemed to be the synergy that 
would help us stay nimble and be able to better respond to market 
dynamics.  Within the past two year, that has all changed.  We've 
seen the worlds 10 largest publicly traded oil/gas companies, 
become the worlds largest 5 publicly traded companies.  Now 
"size" seems to be the trend!  "Greater leverage" and "combined 
synergies" are the buzzwords.

The media/entertainment industry sure seems to be picking up on 
this too.  Recently we've seen some blockbuster deals in the 
"media/entertainment" industry.  French entertainment giant 
Vivendi Universal (NYSE:V) has been very active with a recent 
investment of $1.5 billion in EchoStar (NASDAQ:DISH).  That 
investment was made to help DISH with its $26 billion deal to buy 
DirecTV parent Hughes Electronics (NYSE:GMH).  Not long after 
Vivendi spent $1.5 billion with DISH, it made public its 
intentions to buy USA Networks (NASDAQ:USAI) for $10.3 billion.  
Today we've got AT&T spinning off its cable asset to Comcast.

So how do I make money from all this?

I find the large amount of "acquisition" activity taking place in 
the media business very interesting.  Most often, a "market top" 
is hinted at with a plethora of merger activity.  The "reason" 
for that phenomenon is that stock prices are often lofty and a 
company can leverage that stock price value.  Yes, they often 
times pay a lofty premium for the company/asset they're 
acquiring, but they're looking 5, 10 or 20-year out.

So what is all this "media" merger stuff about?  Vivendi's 
(NYSE:V) stock has declined from $80 to $52 in the past year.  
They sure aren't "leveraging their stock price."  EchoStar's 
(NASDAQ:DISH) is off of it year 2000 high's near $80 at $26.37.  
They sure aren't leveraging their stock.

Something's going on!  Why?  Because it doesn't make sense.  This 
isn't supposed to be happening.  But wait... it does make sense!  
Perhaps many of these acquisitions that are taking place is a new 
way of thinking at corporations.  Maybe they're actually using 
the lower interest rates to actually buy depressed assets that 
will appreciate in value longer-term.

That makes sense!  In the past, what never made sense to me 
(other than sacrificing your existing shareholders) was that 
company's would spend, spend, spend on mergers and acquisitions 
and pay premiums for competitors or their assets at inflated 
prices when interest rates were high because the Fed was 
tightening as the economy was growing like a weed.

Maybe media has it right!  Buy low, sell high?

I'm going to have to think about all this, but I'm going to start 
keeping an eye peeled for some media stocks with bullish chart 
patterns.  I do NOT want to deviate from my trading plan or 
disciplines I use for selecting stocks.  I will only use some of 
the observation being made above as some conviction to trade long 
a stock that is giving buy signals, breaking above downward 
trends or moving above longer-term moving averages on good 
volume.  If it "doesn't make sense," then all the better!  As 
long as the trade/investment is going the direction I feel it 
should, that's all 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.

----------

Charles Schwab - SCH - close: 15.77 change: +0.47

WHAT TO WATCH: SCH closed above its 200-dma on strong volume 
today, ahead of the earnings report from GS, LEH, and MWD due out 
before tomorrow's open and after tonight's close.  Though 
analysts have lowered earnings expectations for the online broker 
from 10 cents to 8 cents for the fourth quarter, the broker 
dealer segment of the market has under-performed the broad 
markets and has recently garnered investor's attention.  The 
stock has been range bound between $14 and $16 since early 
November but this trading range had narrowed to $15 - $16 over 
the last couple of weeks as the stock battled with its 200-dma.  
The big move today produced a bullish engulfing candlestick 
pattern that should forecast the beginning of a new bullish 
trend.  Keep an eye on the current overhead resistance between 
$16 and $16.30.  A close over this level may be a good trigger 
point to go long.




---

Pixelworks – PXLW - close: 17.46 change: -0.52

WHAT TO WATCH: After flirting with its 200-dma near the 7th of 
December, shares of PXLW look like they are back for more.  
Investors may have heard about the stock recently due to a few 
analyst comments that the company is undervalued at least 
compared to its competitors.  One analyst felt that PXLW should 
see a 40% increase in sales next year (PXLW makes flat panel 
screens and displays).  We like the recent bounce at $16 but the 
trading activity on Wednesday (today) was not impressive.  Keep 
your eyes open for potential bounces near $16 or a breakthrough 
of its 200-dma (currently at 18.77).




---

C-Cor.net Corp – CCBL – close: 15.00 change: +0.75

WHAT TO WATCH: CCBL created a new 52-week high after three days 
of increasing upside volume have driven the stock through 
resistance at 14.00 and beyond.  The triple top breakout 
indicated on the Point and Figure chart is a bullish sign that 
shares could continue to run up.  The company has beaten earnings 
estimates by a considerable margin the last two quarters and with 
numbers due out before the market opens on January 17th, shares 
could be well positioned to head higher into the announcement.  
Resistance looms at 16.00 but shares should find new support at 
$14 (previous resistance).  A pullback to 14.00 might provide a 
beneficial entry point, as shares might currently be a bit over-
extended and we advise traders to confirm direction of the stock 
before opening a position.  Don't forget to use a stop.  (the
earnings date is an estimate).




---

Manugistics – MANU – close: 17.45 change: -0.06

WHAT TO WATCH: MANU presents quite an interesting scenario in the 
coming days.  First, the company is scheduled to report earnings 
after tomorrow's close.  Second, CS First Boston raised their 
rating on the stock from a "hold" to a "buy" before this 
morning's open.  As a result, shares gapped higher, but the rally 
did not last.  Sellers took profits for the remainder of the day, 
dropping shares beneath yesterday's close.  Though shares made a 
valiant attempt to reach the 200-dma, the rally lost its wheels, 
despite the upgrade.  If MANU meets or exceeds earnings, the 
stock could make a move back toward the 200-dma, currently near 
$20.00.  However, if the company misses their numbers then the 
stock could retrace back to support just above 15.00.  Our 
advice, wait till the numbers are released to determine the 
direction of the stock.  If MANU can break through the 200-dma at 
19.91 (okay, $20) then next level of resistance lies at 25.00.  




---

BJ Services – BJS – close: 31.00 change: 1.87

WHAT TO WATCH: The Oil Index (OIX.X), Oil Services (OSX.X), and 
the Natural Gas Index (XNG.X) were among today's top performing 
sectors, a reflection of their components performance throughout 
the day.  It was odd that oil and natural gas futures did very 
little on the session.  This presents an interesting contrast 
between the OSX.X and today's move in shares of BJS.  The OSX.X 
closed about 15% under its 200-dma while BJS gapped up this 
morning to regain its 200-dma.  The buying in BJS continued 
throughout the session, stopping shy of its 61.8% retracement 
level of 31.47 (we're using the April high to the September low 
to gauge retracements).  After two days of rising volume, the 
next question is whether or not this oil service stock can push 
through resistance at 32.00 or whether it will falter to re-test 
support.  A rise in the per barrel price of oil could make the 
case for the stock to continue its run up to 37.00, ahead of the 
OSX.X.




---

AOL Time Warner – AOL – close: 33.03 change: +0.28

WHAT TO WATCH: Tomorrow should prove to be quite an interesting 
day for shares of AOL.  After tonight's close it was announced 
that Comcast would buy AT&T's troubled broad band cable unit.  
Though terms were not disclosed, the "whisper" number of the 
acquisition price was valued at approximately $72 billion.  How 
will this bode for shares of AOL tomorrow?  Well, it's difficult 
to say at this early juncture.  At the time of this writing, AOL 
was down a mere 3 cents in after hours trading while CMCSK traded 
slightly lower as well.  Our early take on the deal is that AOL 
shares should benefit in tomorrow's trading, perhaps breaking 
through the 50-dma at 34.10 early on.  A close above this level 
could be the beginning of a new bullish trend that ended in mid-
November.  However, if traders just don't care the current 
prevailing down trend may stay in affect and we would look for 
the stock to fail at resistance near its 15-dma.  AOL will likely 
find support near $30.  Don't forget top take a look at MSFT and 
COX tomorrow.  MSFT could see a surge higher considering that its 
arch-rival AOL lost out on the bid.  COX shares could fly high 
after avoiding some $22 billion in additional debt it would have 
had to take on with the AT&T's broadband unit.




---

Flextronics – FLEX – close: 24.17 change: -1.55

WHAT TO WATCH: Solectron posted a $52.5 million loss in its first 
quarter on Tuesday, ravaged by sharp declines in its PC and 
Telecom operations.  Credit agencies promptly reduced the 
company's credit rating to junk status and the stock sank.  
Shares of FLEX, a strong competitor of SLR, followed suit 
falling more than 6% on the day.  FLEX refused to give up support 
at the 50 or the 200-dma (for the moment).  Two days of rising 
downside volume suggest that if FLEX loses its 200-dma at 23.34, 
shares could be in for a further tumble, perhaps to support at 
the $20 level or even November's late month low near $18.  
However, lets not jump to conclusions just yet.  FLEX has been 
far more pre-emptive at cutting costs than SLR and with the 
company's earnings announcement not scheduled for release until 
January 24th, investors' recent interpretation for FLEX might 
prove to be more reactive than educated.  If support holds at the 
200-dma, look for FLEX to spend some time consolidating before 
making any real move- barring influential external events, of 
course.






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

Mixed news delivers mixed markets
Russ Moore


The blue-chip DOW enjoyed another winning session thanks too 
stronger than expected economic data. The NASDAQ was playing a 
different tune, with chip stocks leading the decline.

The index of leading indicators showed an increase of +0.5 
percent, prompting the Conference board to state the “recession 
could be losing steam”. The upbeat news was enough to send the 
DOW higher by +0.7 percent and a close above 10,000. 

Last night’s after the bell warnings from Motorola and Micron 
Technology proved too tough to overcome, giving the NASDAQ a loss 
of –1.1 percent. The NDX slipped –1.3 percent.

Natural gas, utility, oil service and bank sectors were the best 
performers on the day while gold and chip sectors faired the 
worst. Chip stocks were not helped by a report from Dataquest 
data showing semiconductor sales had fallen –33 percent this 
year, the worst decline in history.

Volume was moderate with 1.31 billion shares moving on the big 
board and 1.75 billion on the tech index. Losers nosed out 
winners by a 16/15 margin on the NYSE and 20/15 count on the 
NASDAQ.

Fund managers will be busy over the next two days putting the 
final touches on their “window dressing”. Throw in triple 
witching and it should make for a roller-coaster ride in to the 
weekend.


Wednesday 12/19 close: 24.13


VXN
Wednesday 12/19 close: 49.02


30-yr Bonds
Wednesday 12/19 close: 5.53


Total Put/Call Ratio: .63


Equity Option Put/Call Ratio: .55


Index Option Put/Call Ratio: 1.11


===

NASDAQ 100 Index (NDX/QQQ)
52-Week High: 103.51
52-Week Low:   28.19
Current close: 40.51

Volume/Open Interest
Maximum calls: 40/171,219
Maximum puts : 40/144,435

Moving Averages
 10 DMA 41
 20 DMA 40
 50 DMA 37
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: 588.72

Volume/Open Interest
Maximum calls: 600/5,795
Maximum puts : 500/5,788
Moving Averages
 10 DMA  582
 20 DMA  585
 50 DMA  574
200 DMA  601

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: 1149.56

Volume / Open Interest
Maximum calls: 1150/50,298
Maximum puts : 1150/55,411
Moving Averages
 10 DMA 1140
 20 DMA 1142
 50 DMA 1118
200 DMA 1170

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: 10,070.49

Volume / Open Interest
Maximum Calls: 92/29,024
Maximum Puts   90/47,514

Moving Averages:
 10 DMA  9,939
 20 DMA  9,910
 50 DMA  9,643
200 DMA 10,109

Fibanocci Retracements
Relative High: 11,350.05 (05/22/01)
Relative Low    8,062.34 (05/21/01)
38%  9,308.92
50%  9,693.99
62% 10,085.60

==

Biotech Index (BTK)
52-Week High:  811.61
52-Week Low:   383.28
Current close: 584.60

Volume / Open Interest
Maximum Calls: 620/  603
Maximum Puts:  540/1,167

Moving Averages
 10 DMA 582
 20 DMA 591
 50 DMA 563
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: 537.61

Volume / Open Interest
Maximum Calls: 600/2796
Maximum Puts:  470/1250

Moving Averages
 10 DMA 561
 20 DMA 544
 50 DMA 506
200 DMA 558

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: 382.95

Volume / Open Interest
Maximum Calls: 400/375
Maximum Puts:  360/325

Moving Averages
 10 DMA 383
 20 DMA 391
 50 DMA 392
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, 12/14. 
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 
11/27/01     371,336   421,405   (50,069)    8.7%
12/04/01     360,315   420,919   (60,604)   21.0%
12/11/01     367,397   429,640   (62,243)    2.6%

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
11/27/01       151,317    92,807    58,510     9.1%
12/04/01       159,336    86,534    72,802    24.4%
12/11/01       158,490    86,717    71,773    (1.4%)

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 
11/27/01      37,259    48,315   (11,056)   31.5%
12/04/01      42,191    51,426    (9,235)  (16.5%)
12/11/01      45,468    51,392    (5,924)  (35.9%)

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
11/27/01       12,540     8,359    4,181     (11.1%)
12/04/01       11,808     8,311    3,497     (16.4%)
12/11/01       12,425    11,754      671     (81.0%)

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 
11/27/01      24,243    11,496   12,747     (5.6%)
12/04/01      22,703    10,739   10,739    (15.7%)
12/11/01      23,135    12,576   10,559     (1.7%)

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
11/27/01       4,228    10,630    (6,402)     (8.0%)
12/04/01       3,677     9,799    (6,122)     (4.4%)
12/11/01       3,469     9,065    (5,596)     (8.6%)
 
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        +71,773     +72,336        -62,243     -60,604

Total Open
Interest %       (+29.27%)  (+29.61%)      (-7.81%)   (-7.76%)
                 net-long   net-long       net-short  net-short


                     Small Specs             Commercials
DJIA futures     (Current) (Previous)    (Current) (Previous)
Open Interest
Net Value          -5,596     -6,122          +10,559    11,964
Total Open
interest %       (-44.65%)    (-45.43%)      (+29.57%)  (+35.78)
                 net-short   net-short     net-long    net-long


                     Small Spec              Commercials
NASDAQ 100      (Current) (Previous)    (Current) (Previous)
Open Interest
Net Value         +671      +3,497         -5,924    -9,235

Total Open
Interest %        (+2.78%)   (+17.38%)     (-6.12%) (-9.86%)
                 net-long   net-long      net-short net-short


What COT Data Tells Us
----------------------
Indices:.No significant changes this week.

Gold: Commercials reversed course and went net-long this week. 
Interesting to note the performance of the XAU (gold and silver 
index) over the last few days. The index has enjoyed a nice run 
since Tuesday.

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
12/11 13,626 contracts net-long

Data compiled as of Tuesday 12/11 by the CFTC.





=========================
Play-of-the-Day (Bearish)
=========================
(new Net Bulls play)

Taiwan Semiconductor - TSM - close: 17.50 chg: -0.78 stop: 18.01

Company Description:
TSMC is the world's largest dedicated semiconductor foundry, 
providing the industry's leading process technology and the 
foundry industry's largest portfolio of process-proven library, 
IP, design tools and reference flows. The company operates two 
advanced 300mm wafer fabs, seven eight-inch fabs and two six-inch 
wafer fabs. TSMC also has substantial capacity commitments at two 
joint ventures fabs (Vanguard and SSMC) and at its wholly-owned 
subsidiary, WaferTech. In early 2001, TSMC became the first IC 
manufacturer to announce a 0.10-micron technology alignment 
program with its customers. (source: Company Press Release)

Why We Like It:
Semiconductor stocks have had one heck of a run since bottoming 
out on October 2nd.  The SOX.X rocketed more than 65% from early 
October to early December as investors poured cash back into the 
market, squarely focusing on tech issues.  It was a big deal two 
weeks ago when the SOX.X regained its 200-dma for the first time 
in over four months.  However, after such a powerful and 
prolonged rally higher the group was ripe for profit taking.  Yet 
each time the sector started to consolidate lower the bulls were 
there to pick it back up even after it broke down below its 
ascending bullish trend line.  This time the SOX index has fallen 
below both its 200-dma and its ascending bullish trend line.

TSM also began its multi-week rally on October 3rd, in tandem 
with the SOX.X.  Then it proceeded to surge to a close of 19.08 
on December 5th.  Early December had shares of TSM leaping higher 
with big gaps up each morning.  The high on December 5th came on 
the heels of an upgrade by CS First Boston after TSM-competitor 
SMIC announced that its orders for the next year were "very, very 
full".  Is a gain of 102% over the course of three months 
sustainable?  We think not, at least not without some serious 
profit taking to balance out the gains.  Semis have begun to  
consolidate since reaching its own highs and shares of TSM are  
following suit. 

Today's close marks the third finish under support at 18.00 in 
the last 8 sessions.  Only this time it looks as if it will 
stick.  TSM's MACD has begun to roll over and the SOX.X broke 
down today and lost significant support at the 200-dma.  After 
spending the last few sessions trying to hold support at $18, 
shares of TSM have failed.  To make the technical picture worse, 
TSM has closed below its 15-dma for the first time since November 
28th.  Last time this support at the 15-dma was broken TSM 
quickly recovered but the sector was in the midst of a strong 
bullish rally.  This time the sector is looking tired and in need 
of a more prolonged pull back.  

We have a trading strategy for both short-term traders as well as 
swing traders.  Those looking for a short-term trade may want to  
consider exiting the short position at 15.50 to 15.30 where 
shares found support back on the 28th of November.  This happens 
to coincide with a retracement level (based on the Sept/Oct. lows 
to the Dec. highs).  Swing-traders may want to look towards the 
200-dma found near $14.15, which is just above the 50% 
retracement level of the range mentioned above).  We're going to 
initiate the play with a stop at $18.01.  Traders should confirm 
direction in both the stock and the index before committing any 
capital.  More conservative traders may want to wait for shares 
to fail below the $17.00 mark to make sure this isn't a bear 
trap.  

Picked on December 19th at $17.50
Change since picked:        +0.00
Earnings Date               01/25 (unconfirmed)








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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

For more information on advertising in PremierInvestor.net
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.



PremierInvestor.net Newsletter               Wednesday 12-19-2001
                                                   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/8126_2.asp
=================================================================

In section two:

Net Bulls
  New Bearish Play: TSM

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 Play
===========

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

Taiwan Semiconductor - TSM - close: 17.50 chg: -0.78 stop: 18.01

Company Description:
TSMC is the world's largest dedicated semiconductor foundry, 
providing the industry's leading process technology and the 
foundry industry's largest portfolio of process-proven library, 
IP, design tools and reference flows. The company operates two 
advanced 300mm wafer fabs, seven eight-inch fabs and two six-inch 
wafer fabs. TSMC also has substantial capacity commitments at two 
joint ventures fabs (Vanguard and SSMC) and at its wholly-owned 
subsidiary, WaferTech. In early 2001, TSMC became the first IC 
manufacturer to announce a 0.10-micron technology alignment 
program with its customers. (source: Company Press Release)

Why We Like It:
Semiconductor stocks have had one heck of a run since bottoming 
out on October 2nd.  The SOX.X rocketed more than 65% from early 
October to early December as investors poured cash back into the 
market, squarely focusing on tech issues.  It was a big deal two 
weeks ago when the SOX.X regained its 200-dma for the first time 
in over four months.  However, after such a powerful and 
prolonged rally higher the group was ripe for profit taking.  Yet 
each time the sector started to consolidate lower the bulls were 
there to pick it back up even after it broke down below its 
ascending bullish trend line.  This time the SOX index has fallen 
below both its 200-dma and its ascending bullish trend line.

TSM also began its multi-week rally on October 3rd, in tandem 
with the SOX.X.  Then it proceeded to surge to a close of 19.08 
on December 5th.  Early December had shares of TSM leaping higher 
with big gaps up each morning.  The high on December 5th came on 
the heels of an upgrade by CS First Boston after TSM-competitor 
SMIC announced that its orders for the next year were "very, very 
full".  Is a gain of 102% over the course of three months 
sustainable?  We think not, at least not without some serious 
profit taking to balance out the gains.  Semis have begun to  
consolidate since reaching its own highs and shares of TSM are  
following suit. 

Today's close marks the third finish under support at 18.00 in 
the last 8 sessions.  Only this time it looks as if it will 
stick.  TSM's MACD has begun to roll over and the SOX.X broke 
down today and lost significant support at the 200-dma.  After 
spending the last few sessions trying to hold support at $18, 
shares of TSM have failed.  To make the technical picture worse, 
TSM has closed below its 15-dma for the first time since November 
28th.  Last time this support at the 15-dma was broken TSM 
quickly recovered but the sector was in the midst of a strong 
bullish rally.  This time the sector is looking tired and in need 
of a more prolonged pull back.  

We have a trading strategy for both short-term traders as well as 
swing traders.  Those looking for a short-term trade may want to  
consider exiting the short position at 15.50 to 15.30 where 
shares found support back on the 28th of November.  This happens 
to coincide with a retracement level (based on the Sept/Oct. lows 
to the Dec. highs).  Swing-traders may want to look towards the 
200-dma found near $14.15, which is just above the 50% 
retracement level of the range mentioned above).  We're going to 
initiate the play with a stop at $18.01.  Traders should confirm 
direction in both the stock and the index before committing any 
capital.  More conservative traders may want to wait for shares 
to fail below the $17.00 mark to make sure this isn't a bear 
trap.  

Picked on December 19th at $17.50
Change since picked:        +0.00
Earnings Date               01/25 (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 

P       Phillips Petroleum Co      57.85     +1.16
SO      The Southern Company       24.66     +0.88
EXC     Exelon Corp                47.29     +0.51
APC     Anadarko Petroleum Corp    52.95     +0.76
RDN     Radian Group               41.00     +0.80

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

CMH     Clayton Homes Inc          17.15     +1.13
PIR     Pier 1 Imports Inc         17.72     +1.02
ILA     Aquila Inc                 16.28     +1.07
VRTY    Verity Inc                 19.47     +1.53
VIRL    Virage Logic Corp          18.41     +3.46

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

PEP     Pepsico Inc                49.38     +2.00
KRB     MBNA Corp                  34.55     +1.25
DUK     Duke Energy Corp           37.68     +1.38
RIG     Transocean Sedco Forex     31.50     +1.78
SSP     E.W. Scripps Co            67.26     +1.39

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

TXN     Texas Instruments Inc      27.90     -1.91
AA      Alcoa Inc                  35.38     -2.28
FLEX    Flextronics Intl           24.17     -1.55
JBL     Jabil Circuit Inc          24.75     -1.93
IMCL    Imclone Systems Inc        61.60     -4.15

----------------------------------------- 
Recently Overbought With Bearish Signals (Stocks over $20)
------------------------------------------- 
Ticker  Company Name               Close     Change 

ICN     Icn Pharmaceuticals        30.88     -0.59
MAC     Macerich Co                25.85     -0.40






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

For more information on advertising in PremierInvestor.net
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.


DISCLAIMER

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

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