Option Investor

Daily Newsletter, Monday, 12/24/2001

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PremierInvestor.net Newsletter                 Monday 12-24-2001
                                                  section 1 of 1
Copyright  2001, All rights reserved.
Redistribution in any form is strictly prohibited.

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************************* MERRY CHRISTMAS ***********************

Market Wrap:      Dear Santa...

- Play Updates -

 Net Bulls (Tech Stocks)
   Bullish Play Update:  XMSR
   Closed Bullish Play:  ACRT

 StockBottom (Non-tech Stocks)
   Bullish Play Update:  BRL
 High Risk/High Reward
   Stop Adjustments:     MICT
   Closed Bullish Play:  TDSC

U.S. Market Numbers
MARKET WRAP  (view in courier font for table alignment)
        12-24-2001        High      Low     Volume Advance/Decline
DJIA    10035.30 -  0.00 10072.90 10034.40  443 mln   1742/1200	
NASDAQ   1944.40 -  1.40  1953.90  1942.07  555 mln   1786/1653
S&P 100   585.19 -  1.22   587.33   585.18   totals   3528/2853
S&P 500  1144.65 -  0.24  1147.83  1144.62           
RUS 2000  485.81 +  1.79   485.93   483.54
DJ TRANS 2605.57 +  0.34  2609.37  2588.25
VIX        23.23 -  0.08    23.67    22.79
Put/Call Ratio      0.54

Market Wrap

Dear Santa

Thanks for stopping in!  I've put some milk and cookies on the 
table by the tree.  I'm a bit surprised you stopped by this year 
as I didn't get my list to you in time.

I do however wish to thank you for last year's stock pick.  I 
doubted your "intuition" at first, but later that spring, the 
stock did break above downward trend and gave a buy signal at 
$63.  Today that stock just traded a new 52-week high at $82.46.  
I'm kind of surprised that stock has done so well.  The Drug 
Index (DRG.X) has had a tough year, but that stock (Forest Labs 
NYSE:FRX) has really bucked the sector trend.  If you ever need a 
second income let me know.  While some may actually doubt that 
you exist, I must say you're one heck of a stock picker.  Hope 
you don't mind that I did check the relative strength of that 
stock back in May, and when I saw the relative strength turning 
up and giving a buy signal when the stock was moving through 
bearish resistance, I could envision you in your sleigh, being 
pushed to the back of the bench as Rudolf and crew headed higher.

On a somber note.  I lost a dear friend of mine this past year.  
His name was Steve.  He was killed in a car crash by a drunk 
driver.  It's a very sad story.  He was headed back home in his 
daughter's small-sized pickup truck when some guy hit him from 
behind and pushed the truck he was in down the hill.  He had just 
been to the gas station to fill her truck up with gas, just 
before her trip back to school in Nebraska.  Fortunately for 
Steve's family, he was a very good investor and his family is 
secure in their future.

Steve and I always looked forward to going goose hunting together 
this time of year.  I remember one time it was a sunny afternoon 
and we were lying in a cornfield.  We were just looking up in the 
sky and talking about stocks, family and other stuff.  Then we 
heard a distant "skoooo-eek" sound.  We knew it was the sound of 
a snow goose, but we couldn't see anything.  We just laid there 
in the corn with the sun beating down on us.  Pretty soon we saw 
the geese way up in the air.  We both were amazed at just how 
high those darned things could fly.

I started blowing on my goose call and Steve started chuckling.  
"There's no way you're calling those things down here, they've 
got their oxygen masks on and they're headed south."  Well Santa, 
you should have seen the look on Steve's face about 10-minutes 
later when we had that flock of 200 "snows" with their wings 
locked and coming to the decoys.  To tell you the truth, I never 
really thought those geese would come down from that altitude, 
but sometimes things do come down and much farther than we ever 
think imaginable.  While I feel like I'll never experience that 
event again, I can reflect on what took place that day and 
appreciate it.

On days when Steve and I would go hunting together, there were 
quite a few times we wouldn't harvest anything.  Steve used to 
say in a kidding way, "Jeff... gooses are like stock profits.  
They're where you find 'em.  And when I'm with you, they're both 
hard to find."  He'd start laughing in his "hee, hee, heeee" type 
of way.

Well Santa, I've taken enough of your time.  I don't feel that I 
"deserve" any kind of gift from you this year.  I know not to ask 
for the impossible, but if you could bring my friend back, I'd 
sure ask for that.  Not sure what kind of pull you have with the 
powers that be, but I'd also ask that everyone I know have a 
pleasant and safe holiday season.

If you've got a stock pick I'd appreciate it.  I understand that 
there are no guarantees.  As you said last year, follow with a 
stop and sell at my target, or at least move my stop up to 
profitability when the target has been achieved to help assure 

Thanks again for stopping in and have a safe trip!

Jeff Bailey
Senior Market Technician
Premier Investor

Net Bulls (NB) / Tech Stock section

NB Play Updates

  Bullish Play Updates

XM Satellite Radio - XMSR - cls: 19.16 chg: +1.28 stop: 17.49 *new*

Santa left us a Christmas present today and it sounded a lot like 
XMSR.  Shares gapped up to $18.85 and almost made it to $20 
before pulling back to the $19 level.  This puts the newsletter 
up over 46% in the play.  Bulls should strongly consider taking 
profits if you have not already.  Many traders will sell half 
their winning positions and play with tight stops on the second 
half to try and maximize their gains.  However, each trader 
should use his or her own style of money management.  There was 
no news for the stock so we could be witnessing more short-
covering.  We're going to raise our stop to $17.49, which should 
protect a gain of $4.43 or almost 34%.  Feel free to adjust to 
your own liking.  We would not be surprised to see the stock 
trade back to $18 before bouncing higher but then shares never 
touched $16 after gapping up last Monday.  

Picked on December 10th at 13.06
Change since picked:       +6.10
Earnings Date                N/A

NB Closed Plays

  Closed Bullish Play 

Actrade Fincl. Tech - ACRT - cls: 28.42 chg: -2.36 stop: 29.95 

Among the few surprises that unwrapped themselves this Christmas 
eve was the breakdown in ACRT.  Friday we mentioned that the stock 
could see some volatility but we weren't expecting it on Monday.  
There wasn't any news we could discern but shares of ACRT fell 
below support of $30.50 just after 11:00 a.m. ET and then fell 
through stronger support of $30 about 45 minutes later.  The 
second breakdown came on strong volume as if one big shareholder 
wanted to liquidate their position but we are just speculating.  
Fortunately, we raised our stop to $29.95 over the weekend and 
will close the play for a small loss.

Picked on December 9th at $30.96
Change since picked:      - 1.01
Earnings Date              01/24 (confirmed)

Stock Bottom / Active Trader (AT) section

AT Play Updates

  Bullish Play Updates

Barr Labs - BRL - close: 79.59 change: +1.60 stop: 75.99

We didn't have to wait long for shares of BRL to cross our 
trigger point of $79.05 to go long.  The stock turned in a strong 
day gaining two percent.  Odds are the attention was due to the 
media focus on Schering-Plough (SGP) and BRL's stake in a generic 
form of Claritin.  We were not surprised to see $80 act as a 
first obstacle for BRL.  Let's hope it remains only a temporary 
hurdle.  Today's attention to SGP and other drug stocks should 
also serve as a warning that any negative news for the generic 
drug makers or the drug industry as a whole might be our undoing 
down the road.  Right now investors are betting on BRL to follow 
through with their earlier comments for stronger earnings results 
and if they don't then beware the wrath of disappointed traders.  
We would look for the bulls to confirm the new upside breakout in 
the stock price.  If they don't do so on Wednesday then players 
may want to tighten their stops.

Picked on December 24th at $79.05
Change since picked:        +0.54
Earnings Date               10/23 (confirmed)

High Risk / High Reward (HR) section

HR Stop Adjustments

  Bullish Play Updates

Microcell Telecomm. - MICT - cls: 2.30 chg: +0.20 stop: 1.99*new*

Shares of MICT closed up 9.5% on Christmas Eve and appear poised 
to make it to $2.50 shortly.  Monday's move was nice confirmation 
to Friday's close over $2.00.  We strongly considered moving our 
stop to cost at $2.10 and more conservative traders may want to 
follow this strategy.  Yet as a "high-risk" play we're going to 
give it a bit more room to move but we're still raising our stop.

Picked on December 21st at $ 2.10
Change since picked:        +0.20
Earnings Date               11/12 (confirmed)

HR Closed Plays

  Closed Bullish Play 

3-D Systems - TDSC - close: 13.95 change: -0.19 stop: 13.75 

Support at $13.65, near the 200-dma, did hold on Monday but not 
before shares dipped down to $13.25 soon after the open.  The 
quick descent stopped us out at $13.75, our new stop from the 
weekend.  Thus, we are closing the play with a move of $2.23 or a 
little more than 19%.  We didn't see any news on the day and if 
shares can build on support above $13 and $13.65, TDSC might 
offer new long opportunities but it will remain a high-risk 
strategy.  Trade carefully.

Picked on December 7th at $11.52
Gain since picked:         +2.23
Earnings Date              10/17

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