Option Investor

Daily Newsletter, Wednesday, 12/26/2001

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PremierInvestor.net Newsletter              Wednesday 12-26-2001
                                                  section 1 of 2
Copyright  2001, All rights reserved.
Redistribution in any form is strictly prohibited.

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In section one:

Market Wrap:      The "Bin Laden" tapes
Watch List:       APA, CPE, HRB, BPRX, CNC
Market Sentiment: Retailers bring some Christmas cheer.
Play-of-the-Day:  One way or the other.

U.S. Market Numbers
MARKET WRAP  (view in courier font for table alignment)
      12-26-2001          High     Low     Volume Advance/Decline
DJIA    10088.14 + 52.80 10169.09 10034.93  801 K     2066/1074	
NASDAQ   1960.70 + 16.22  1983.84  1948.77 1.11 bln   2183/1494
S&P 100   587.50 +  2.31   592.84   585.19   Totals   4249/2568
S&P 500  1149.37 +  4.72  1159.18  1144.65
RUS 2000  490.19 +  4.38   490.60   485.76
DJ TRANS 2630.22 + 24.65  2632.24  2602.44
VIX        22.93 -  0.28    24.56    22.38
VXN        49.06 -  0.38    49.61    48.79
TRIN        0.93
Put/Call    0.54

Market Wrap

The "Bin Laden" tapes

Rumor and speculation about Osamah Bin Laden being "dead or 
alive" impacted stock action today after Arabic news agency Al 
Jazeera said it had a new Bin Laden tape.  That news found stocks 
trading off their best levels of the session with the Dow 
Industrials still trading up 100 points.

As stocks drifted off their best levels, MSNBC reported that the 
recent airing of said Bin Laden tape was recorded on December 
11th.  Many thought "if true, the tape would have preceded the 
intense bombing of Tora Bora, which began December 12th that U.S. 
officials believe might have killed Bin Laden."  

As the mystery of the "Bin Laden Tapes" unfolded, it appeared 
that some of Bin Laden's words referred to the September 11th 
attacks on the World Trade Center and Pentagon as taking place 
"3-months ago."  The "3-months ago" then had many news agencies 
questioning the "December 11th" date as 3-months ago is rather 
vague and still has many wondering just when the tape was 

By session's end, the Dow Industrials did finish with a 52 point 
gain at 10,088, which was good enough to have this major market 
average closing above its 200-day moving average.  The first such 
close above this moving average since July 19th, 2001, when the 
Dow closed at 10,610.

Stocks hold onto gains

Many of the technology indexes gave back about 3/4 of their gains 
after the news of the "Bin Laden Tapes" existence, but still 
managed to close in positive territory.  The Semiconductor Index 
(SOX.X) finished with a 1% gain at $520, after having traded 
higher by as much as 3.6% at 596.  Sector winners included the 
Disk Drive Index (DDX.X) +2.5% and the CBOE Internet Index 
(INX.X) +2.18%.  Shares of Yahoo! Inc. (NASDAQ:YHOO) gave back 
the bulk of it's early session gains from the $18.27 level, but 
still managed an impressive 5% gain and closed at $17.51.

Oil service stocks (OSX.X) looked to have been the strongest 
sectors today with a 3.7% gain and a close that pegged near the 
session high of $89.41.  A close above the $90 level could well 
se a test of the falling 200-day moving average near $96.  

Helping bolster the move in oil service stocks was the March 
Light, Sweet Crude Oil futures (cl02h) jumping 8.4% to $21.49 
ahead of Friday's decision from OPEC on potential production 
cuts.  Many are expecting a potential production cut of 1.5 
million barrels per day, even without full cooperation by 

Oil Stocks (image)

In the recent couple of weeks we've been alerting 
traders/investors that a bull may have been starting to emerge in 
the energy complex.  That potentially bullish wedge we identified 
on December 13th (see 01:00 EST Update) did unfold on December 
19th and the group now trades the $89 level.  BJ Services 
(NYSE:BJS) has been one of the stocks we've identified as a 
leader in the group and today's 6% didn't disappoint subscribers 
in the least.

It's been my "fundamental" view in the past that OPEC production 
cuts are not necessarily bullish for oil service stocks.  
Production cuts for the most part take away from service 
activity, except for the shutting in of production.  That was 
definitely true for the latter half of 2001 as oil prices 
continued to fall from the high $25 per barrel range and oil 
service stocks got hit hard and sold on every rally attempt.  
With continued production cuts taking place at OPEC, we're now 
starting to see a bit of a base being put in on the crude oil 
commodity and the futures market, indicating that we may be 
starting to see some equilibrium between supply and demand.  
Should oil prices continue to rise from current levels of $19-$21 
per barrel, some of the more "domestic" U.S. based companies may 
start seeing a pick-up in drilling activity.  Should the economy 
start growing here in the U.S. and abroad then energy and oil 
service stocks may be getting ready for a sustained move higher.

Integrated/Operations Oil/Gas Stocks - Sorted by volume

I've put an X by some of the stocks in the above lists and will 
discuss each below.

Amerada Hess (NYSE:AHC) $61.70 +0.94%:  This was a stock I 
mentioned recently on OptionInvestor.com as a stock that looked 
to be gaining some "late favor" in the energy group.  The reason 
I say "late favor" is that this stock recently gave its first 
"buy signal" on its point/figure chart at $61, the first buy 
signal this stock has seen since it traded $75 in late July.  I'd 
rank this stock as a "bottom feeder" that has some room to upside 
resistance.  On the point/figure chart, I could draw an upward 
channel with lower end support at $57 and upper-end resistance at 
$66.  The downward trend (bearish resistance) is currently at 
$73, so there's some upside in this one.  First sign of trouble 
would be a double-bottom sell signal at $56.  Current vertical 
count has just been given with the recent buy signal off the 
bottom and indicates a potential bullish price objective of $73.

Suncore Energy (NYSE:SU) $31.92 :  We briefly mentioned shares of 
Suncore (SU) immediately following the terrorist attacks here in 
the U.S (see trader's corner "Spotlight on the Oil Sector."  This 
was a stock that looked quite strong on its point/figure chart 
and had been and still has held upward trend (bullish support).  
The stock did gap higher immediately following the terrorist 
attacks, but then pulled right back into bullish support at $26, 
then reversed higher to $31, pulled back to $27, and has now 
moved right back up to $32.  Our research showed the company was 
primarily a play on North America as the bulk of reserves were in 
Canada.  We mentioned this stock as it had very little "Middle 
East" exposure and might be a beneficiary of potential global 
unrest and a potential benefactor of disruption of energy 
supplies to the U.S. from overseas.  The current bullish price 
objective from a vertical count dating back to March of this year 
indicated a bullish price objective of $43, which still stands as 
a "sell signal" has not been given since October of 2000.

Apache Corporation (NYSE:APA) $53.85 :  Apache Corporation is an 
interesting stock technically.  Bar chartists will be quick to 
pick up on the potential "reverse head and shoulders" pattern 
developing in this one.  A break above the $55 would have the 
stock breaking its neckline at that level.  With head in place 
near $40, this pattern would indicate a potential bullish 
objective of $70.  I also liked the point and figure chart of APA 
and recent successful test of bullish support at $46 and 
subsequent "buy signal" at $50.  Today, shares of APA cleared its 
200-day MA of $52.50.  Volume was light and it sure would have 
been nice for this one to break this 200-day when all market 
participants were here.  I think $55 will be a formidable test 
near-term.  Current vertical count is bullish to $68, and that's 
pretty darned close the calculation we get from the reverse head 
and shoulders pattern.  Clear stop would be a trade at $45.  
Ideal entry would be for the stock to trade $55, then find a 
pullback near $50-51 for 1/2 position long.  Then should the 
stock be able to break above the neckline of $55, trader/investor 
could average up to full position.

Sunoco (NYSE:SUN) $37:  Shares of Sunoco (SUN) have not been all 
that "exciting" of a stock, but do offer the trader some rather 
obvious stopping points.  The point and figure chart currently 
shows a bullish price objective of $54, but it will most likely 
take a trade at $40 to get this one going to the upside.  First 
sign of trouble on the point/figure chart comes with a trade at 
$34, which would be a double-bottom sell signal.  One reason I 
profile the stock here as a potential bullish candidate is that 
the stock is currently trading in the middle of what looks to be 
a range from $32-$42.  The bar-chart shows a rising 200-day MA 
which has been pierced to the downside 4 different times since 
July of this year, but each time, bulls seem to gobble the stock 
up and move her back to the $39 level.  For the more short-term 
trader, I think this stock is a good bullish candidate if your 
looking to play the "energy" bull, with a stop just below this 
month's lows of $35.50.

Callon Petroleum (NYSE:CPE) $6.60:  This one is for the more 
aggressive bull that's looking for a "higher risk/reward" type of 
play.  Today's 8% gain is what an aggressive bull looks for, but 
they've got to be able to take some heat too.  What aggressive 
bulls may find compelling in this one is today's 8% rise on 
volume of 305,000 shares, which is about 6-times that of average 
daily volume of 52.9K over past 3-months.  This is interesting to 
me considering a rather light volume broader market day due to 
this being a holiday week.  Aggressive bulls may want to keep an 
eye on this one on a break above the $6.75 level.  The point and 
figure chart has been bearish since February of this year, when 
shares of CPE have a sell signal at 13 and bearish vertical count 
indicated a potential bearish price objective of $4.  The stock 
came close on December 3rd, when the stock traded $5.35.  
Again... aggressive energy bulls only on this one.  A bull would 
gladly sell any type of near-term rally near $9.

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.


Apache Corp - APA - close: 53.85 change: +1.52

WHAT TO WATCH: We had APA on the watch list this last weekend as 
a potentially bearish development.  Shares had rallied right to 
its 200-dma and stopped.  APA tried to breakthrough its 
resistance on Monday but couldn't do it.  Fresh expectations on 
Wednesday about OPEC possibly cutting production had the price of 
oil gapping higher on the futures market, which fueled a move in 
the Oil and Oil Services sectors.  APA rallied through its 200-
dma and closed near its high.  Traders may want to watch it for a 
potential pull back.  These developments in oil and OPEC combined 
with a potentially recovering economy may spark a multi-week run 
in the oil group.  Please see Mr. Bailey's wrap for additional 


Callon Petroleum - CPE - close: 6.60 change: +0.49

WHAT TO WATCH: CPE is another energy play but a lot cheaper when 
it comes to dollars per share.  The stock does look pretty 
extended after the three-day run up so traders will want to plan 
their entry carefully.  We would look for a potential pull back 
to $6.00 or $6.10 or wait for shares to close above $6.75.  
Shares topped out at $6.75 several days ago and with the 100-dma 
descending above (currently 6.80) this could be a tough level of 
resistance.  Volume has been very strong for the recent moves up, 
which is a very bullish sign.  CPE is definitely one to watch.


H R Block - HRB - close: 42.99 change: +0.18

WHAT TO WATCH: After the holidays are over people around the 
country will begin to focus on their taxes.  When that happens 
there may be some attention drawn to shares of HRB.  The stock 
has been a huge winner this year and its strength might extended 
through the 2002 tax preparation season.  We would prefer to buy 
on a dip.  Short-term traders may want to look for a dip to $41 
or $40 while longer-term traders may to wait for a deeper round 
of profit taking.  If you do play, don't forget your stop.


Bradley Pharmaceuticals - BPRX - close: 19.76 change: -1.79

WHAT TO WATCH: Shares of BPRX saw a lot of volume today after its 
breakout on Monday above overhead resistance at $20.  
Unfortunately, the stock couldn't hold on to its early Wednesday 
gains or any of Monday's gains either.  The stock has produced a 
bearish engulfing candlestick pattern, which may portend a 
reversal in the trend.  We think BPRX is worth watching for a 
pull back to support near $16.50 to $17.00.  If the stock can 
bounce at these levels it may be a good entry point for a long 


Conseco Inc - CNC - close: 3.98 change: +0.75

WHAT TO WATCH: One of the big losers in 2001, shares of CNC are 
trying to make a comeback.  The question is whether this is a 
short-term rally or the beginning of something better.  The stock 
has already produced a sizeable percentage gain from its lows 
near $3.25 just a week ago.  Wednesday's gain of 23% puts it 
directly below resistance at $4.00 and one cent below its 50-dma.  
Traders can watch it for a breakout to the upside or a slide back 
to $3.50 (or lower).

Market Sentiment

Retailers bring some Christmas cheer.
by Russ Moore

Positive news from Wal-Mart (WMT) and Yahoo (YHOO) provided a 
post-Christmas lift to the markets with the DOW adding +0.5 
percent, the NASDAQ +0.8 percent and the NDX +0.9 percent. The 
session’s gains were tempered in the late going when news of 
another Bin Laden tape hit the wires.

Volume was very thin with only 840 million shares moving on the 
big board and 1.13 billion on the NASDAQ. Winners outperformed 
losers by a 21/11 count on the NYSE and 22/15 on the tech index.

Natural gas and Oil service were the leading players on the 
broader markets while Internet and Networkers led the tech side. 
Red arrows were reserved for the gold and chemical sectors.

Some market observers believe the Wal-Mart/Yahoo numbers will be 
the exception, and not the rule. The Instinet Redbook Research 
report showed retail sales for the first three weeks of December 
had slipped -4.5 percent versus November, and were down -0.9 
percent from last December. The Bank of Tokyo-Mitsubishi retail 
chain-store index rose +2.9 percent from the previous week and 
+2.0 percent from the same week last year (how’s that for 

It’s obvious from today’s volume levels that market participation 
was limited to more fund manager “window dressing”. The real 
action will have to wait until next week, when commercial 
activity picks up and the retail investor gets back in to the 
swing of things.

Wednesday 12/26 close: 22.93

Wednesday 12/26 close: 49.06

30-yr Bonds
Wednesday 12/26 close: 5.52

Total Put/Call Ratio: .58

Equity Option Put/Call Ratio: .49

Index Option Put/Call Ratio: 1.46


NASDAQ 100 Index (NDX/QQQ)
52-Week High: 103.51
52-Week Low:   28.19
Current close: 39.69

Volume/Open Interest
Maximum calls: 40/114,396
Maximum puts : 40/ 88,013

Moving Averages
 10 DMA 40
 20 DMA 40
 50 DMA 38
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: 587.50

Volume/Open Interest
Maximum calls: 590/4,433
Maximum puts : 520/4,428
Moving Averages
 10 DMA  581
 20 DMA  583
 50 DMA  576
200 DMA  600

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: 1149.37

Volume / Open Interest
Maximum calls: 1150/37,922
Maximum puts : 1150/32,643
Moving Averages
 10 DMA 1138
 20 DMA 1142
 50 DMA 1122
200 DMA 1167

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


52-Week High:  11,518.83
52-Week Low:    8,235.81
Current close: 10,088.07

Volume / Open Interest
Maximum Calls: 100/13,854
Maximum Puts   100/26,331

Moving Averages:
 10 DMA  9,937
 20 DMA  9,921
 50 DMA  9,671
200 DMA 10,104

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: 588.43

Volume / Open Interest
Maximum Calls: 650/  231
Maximum Puts:  580/1,281

Moving Averages
 10 DMA 578
 20 DMA 586
 50 DMA 570
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: 520.68

Volume / Open Interest
Maximum Calls: 440/1,084
Maximum Puts:  470/2,006

Moving Averages
 10 DMA 539
 20 DMA 543
 50 DMA 510
200 DMA 556

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: 385.53

Volume / Open Interest
Maximum Calls: 400/525
Maximum Puts:  380/265

Moving Averages
 10 DMA 381
 20 DMA 387
 50 DMA 391
200 DMA 390

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, 12/21. 
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 
12/04/01     360,315   420,919   (60,604)   21.0%
12/11/01     367,397   429,640   (62,243)    2.6%
12/18/01     391,995   456,968   (64,973)    4.3%

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
12/04/01       159,336    86,534    72,802    24.4%
12/11/01       158,490    86,717    71,773    (1.4%)
12/18/01       158,300    80,507    77,793     8.4%

Most bearish reading of the year:  36,513 - 5/01/01
Most bullish reading of the year:  91,122 - 3/06/01

Commercials   Long      Short      Net     %Change 
12/04/01      42,191    51,426    (9,235)  (16.5%)
12/11/01      45,468    51,392    (5,924)  (35.9%)
12/18/01      55,276    58,433    (3,157)  (46.7%)

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
12/04/01       11,808     8,311    3,497     (16.4%)
12/11/01       12,425    11,754      671     (81.0%)
12/18/01       17,649    18,626     (977)   

Most bearish reading of the year:  (1,028) - 1/02/01
Most bullish reading of the year:   8,460  - 3/13/01

Commercials   Long      Short      Net     %Change 
12/04/01      22,703    10,739   10,739    (15.7%)
12/11/01      23,135    12,576   10,559     (1.7%)
12/18/01      21,919    13,810    8,109    (23.2%)

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
12/04/01       3,677     9,799    (6,122)     (4.4%)
12/11/01       3,469     9,065    (5,596)     (8.6%)
12/18/01       6,790    10,943    (4,153)    (25.8%)
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        +77,793     +71,773        -64,973     -62,243

Total Open
Interest %       (+32.58%)  (+29.27%)      (-7.65%)   (-7.81%)
                 net-long   net-long       net-short  net-short

                     Small Specs             Commercials
DJIA futures     (Current) (Previous)    (Current) (Previous)
Open Interest
Net Value          -4,153     -5,596          +8,109    10,559
Total Open
interest %       (-23.42%)    (-44.65%)      (+22.70%)  (+29.57)
                 net-short   net-short     net-long    net-long

                     Small Spec              Commercials
NASDAQ 100      (Current) (Previous)    (Current) (Previous)
Open Interest
Net Value         -977      +671         -3,157    -5,924

Total Open
Interest %        (-2.69%)   (+2.78%)     (-2.78%) (-6.12%)
                 net-short   net-long      net-short net-short

What COT Data Tells Us
Indices:.Commercials held steady on the SPX while continuing to 
reduce their net-short positions on the NASDAQ 100. Small Specs 
were headed the other way on the NDX as they turned net-short. 
Increasing divergence is of key importance and something we’ll be 
watching closely on the tech index.

Gold: It’s easy to see why gold is so difficult to play. After 
two weeks of building net-long positions, Commercial players 
decided to take the opposite side and are now sitting with net-
short contracts. Looking at the charts we see that the XAU hit a 
high point on 12/18.before heading south.

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
12/18 15,198 contracts net-short

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

Play-of-the-Day (Bullish)

SEI Investments Co. - SEIC - close: 44.46 chg: +0.19 stop: 41.99

Company Description:
SEI Investments is a leading global provider of asset management 
and investment technology solutions. The company's innovative 
solutions help corporations, financial institutions, financial 
advisors, and affluent families create and manage wealth. As of 
September 30, 2001 - SEI processes over $1.5 trillion of 
investment transactions daily, administers more than $243 billion 
in mutual fund and pooled assets, manages more than $74 billion 
in assets and operates 25 offices in 11 countries. (source: 
Company Press Release)

- ORIGINAL WRITE UP: Dec. 11th, 2001 -

Why We Like It:
We think bullish traders can make a play in SEIC by playing the 
trend.  Shares of the company have made a huge move from its 
November low to current levels but the stock has been able to 
shrug off any major profit taking attempts.  Each time SEIC has 
encountered resistance shares have consolidated sideways giving 
the stock (and traders) time to digest the latest gains before 
moving higher.  It appears that SEIC may be nearing the end of 
its most recent consolidation period and could be ready for the 
next leg up.  

Before we discuss any potential trading strategy I'd like to 
mention one observation I noticed in SEIC.  Shares made a high 
near $62.50 in very late December of 2000.  Since that time the 
stock has split 2:1, so the high was really near $120, but SEIC 
had also fallen to lows near $30 in April when the whole market 
was hitting its lows.  By July 2001 shares had rallied back to 
the $51 level.  More profit taking ensued and by mid-September 
SEIC was back to sub-30 levels.  All of this can easily be seen 
on any daily chart.  What I find interesting is the trend line 
that has developed from connecting the tops or peaks in the 
chart.  The high last week for the stock closed near this 
descending trend line.  Now, many readers and stock gurus will 
claim that this resistance, formed by the descending trend line 
form the Dec. 2000 to July 2001 peaks is too old.  I am neither 
agreeing or disagreeing but thought it was an odd coincidence 
that SEIC happened to rally right back to this descending trend 
before rolling over.  Opponents can easily counter that SEIC had 
just rallied 10% from support/resistance near $40 and was 
overbought and needed to rest.  I can accept that line of 
reasoning as well.

While the Dow and the Nasdaq have been in decline the last 
several sessions, SEIC has been basing sideways.  The stock has 
found support at the $42 level underpinned by its 10-dma.  The 
action on Friday leads us to believe the bulls might be ready for 
the next hike higher.  One could argue that there is resistance 
near $44.00-$44.50 but we see $45 as the real level to watch.  
Still, a close over $44 would be encouraging (and technically 
over that descending trend line from top to top discussed above).  
While the newsletter is going to "pick" the stock here at $43.41, 
it wouldn't hurt to wait for shares to trade back over $44 before 
evaluating an entry point.  More aggressive traders may want to 
look for dips back to the $42.50-42.60 area.  We are going to 
start the play with a stop at $41.49 even though the low last 
week was $41.76.  Our placement puts the stop below the stock's 
15-dma (41.62).  It would be fair to say that SEIC is overbought 
and the MACD is looking tired but as long as the trend is intact 
we're willing to let it ride.  A glance at the point-and-figure 
chart does show the stock breaking out above its long-term 
bearish trend line and also gives the stock a bullish price 
objective near $73 (long-term target).  We are only aiming for a 
10% to 15% move.

- Most Recent Update, Friday, Dec. 21st, 2001 -

Interested to know how SEIC did on triple-witching Friday?  See 
Thursday.  Not good enough?  See Wednesday as well.  The stock has 
been trading in the same range for three days straight with a few 
minor adjustments on where it opens and closes.  Volume was a bit 
higher on Friday and it did close over $44 but we're not really 
interested in new positions until SEIC can close over $44.50 or 
better yet $45.00.  We strongly considered raising our stop due to 
SEIC's lagging performance but $42 remains price support.  
However, more risk-averse traders can try reducing their exposure 
by using the 15-dma (currently near 42.90) as a guide to place 
their stop.  The 15-dma has been a good level of support since 
Nov. 12th, 2001.  If we don't see a positive move soon we might 
drop the play for lack of performance.  Comments on Thursday for 
aggressive traders still apply.

- Play of the Day comments, Monday, Dec. 26th, 2001 -

We are electing SEIC as the POD (play-of-the-day) for Thursday, 
Dec. 27th, only if it triggers our next action point.  The stock 
has been building a bullish coil for days now and it continues to 
tighten.  Thus a breakout, one way or the other, feels imminent.  
We would consider new plays based on an action point of $45.05 (we 
are actually thinking $45.01 but we'd like to make sure).  If it 
trades above $45 it could both inspire new bulls to buy or scare 
old bears into covering their shorts.  Either one works for us.  

Picked on December 15th at $43.41
Change since picked:        +1.05
Earnings Date               10/16 (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:


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

PremierInvestor.net Newsletter               Wednesday 12-26-2001
                                                   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:

In section two:

Net Bulls (tech stocks)
  Bullish Stop Adjsutments:  XMSR
  Closed Bearish Plays:      AMZN, TSM

Stock Bottom (non-tech stocks)
  Bullish Stop Adjustments:  JCP
  Closed Bearish Plays:      SPY
High Risk/Reward
  Bullish Stop Adjsutments:  MICT
  Closed Bullish Plays:      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

XMSR - close: 18.46 change: -0.70 stop: 17.99 *new*

We are raising our stop on XMSR to just under $18.  The stock
bounced at $18 late this afternoon after investors sold into
the morning rally above $20.

NB Closed Plays

  Bearish Plays

Amazon.com - AMZN - close: 11.10 change: +1.27 stop: 11.10

A little holiday sales hype is to be expected but the buzz over 
this season's online shopping sales seems a bit overdone.  Shares 
of AMZN gapped up this morning after YHOO told reporters prior to 
the opening bell that sales on their holiday shopping sites had 
risen over 80% this year.  As you recall, analysts were growing 
more and more concerned last week that online sales would not be 
as strong as expected.  Yes, everyone expected AMZN to produce 
decent numbers but overall the sector was expected to disappoint 
with little left to encourage investors for the 1Q.  These 
numbers from YHOO may have blown those concerns away.  In our 
weekend write up for AMZN we discussed how analysts first 
believed that holiday sales might hit $11B but then lowered them 
to $8B.  These numbers from YHOO will probably push that figure 
higher again.  Combine the comments from YHOO (if YHOO can do it, 
then AMZN must have done very well this season) with bullish 
comments from U.S. Piper Jaffray this morning and we have a 
recipe for shares of AMZN to move higher.   AMZN's post-Christmas 
debut added almost 13% to the stock price on volume of 18M shares 
but they remain under the stock's 200-dma (for now).  We are 
closing the play at our stop of 11.10.

Picked on December 21st at $10.00
Gain since picked:          -1.10 
Earnings Date                ----         


Taiwan Semiconductor - TSM - cls: 16.34 chg: -0.34 stop: 16.51 

An early morning sector-wide rally in the semiconductors helped 
lift the SOX.X to the 534 level (+3.6%) but investors sold into 
strength and most chip stocks were left with minor gains.  TSM 
joined the morning rally and traded to $16.60 before leveling off 
between $16.50 and $16.40 for most of the day.  This could be just 
a one-day bounce but further short trading may want to wait until 
the stock closes under $16 again.  We are closing the play with a 
99-cent move or +5.6%.  

Picked on December 19th at $17.50
Gain since picked:          +0.99
Earnings Date               01/25 (confirmed)

StockBottom/Active Trader (AT) section

AT Stop Adjustments

Bullish Plays

J.C. Penny - JCP - close: 26.18 change: +0.37 stop: 25.59 *new*

Investors chose to focus on the positive as dueling stories about 
last minute shoppers boosting sales sparred with articles 
renewing concerns that this was the worst Christmas shopping 
season in a decade.  Many retailers are still expected to post 
declining sales while Wal-Mart (WMT), the largest retailer on the 
planet, claims that sales will be near the upper edge of their 
estimates (close to a 6% gain).  Shares of JCP joined the RLX.X 
retail index in a post-Christmas rally.  The RLX.X broke out 
above stiff resistance at 920 and JCP closed above resistance at 
$26.  Unfortunately, like many equities today, JCP could not 
maintain most of its gains.  We're going to snug our stop even 
tighter in hopes of protecting our current gain.  With a new stop 
at $25.59, we should be able to keep a $2.51 move or 10.8%.  If 
JCP keeps inching higher, we won't complain.

AT Closed Plays

  Bearish Plays

S&P 500 Spiders - SPY - close: 115.36 change: +0.63 stop: 116.05 

As expected, Monday was pretty lethargic and the index didn't move 
much.  The bulls returned to Wall Street on Wednesday but they met 
with stiff resistance after the initial rush.  S&P 500 couldn't 
conquer resistance at $116 and but traded high enough (116.20) to 
stop us out.  We are closing the play with a $1.40 loss.  The late 
day dip in the markets doesn't inspire a lot of courage for 
tomorrow and we still suspect that a short play for the SPY may be 
profitable but we may not see the right entry point until mid-

Picked on December 20th at $114.65
Gain since picked:           -1.40
Earnings Date                  N/A

High Risk / High Reward (HR) section

HR Stop Adjustments

Bullish Plays

Microcell Telecomm. - MICT - cls: 2.52 chg: +0.22 stop: 2.38*new*

The gift that keeps on giving.  MICT added another 9.5% on 
Wednesday after its 9.5% gain on Monday.  That puts our new HR 
long play at a +20% move in two sessions.  For many traders that 
is a great move and you may want to consider taking profits now.  
Knowing when to sell is the hardest part of the game but it boils 
down to each trader's personal money management plan.  We 
strongly considered closing MICT ourselves but have chosen to 
raise our stop to protect the majority of the move.  Bulls should 
be encouraged that MICT has closed the gap between $2.00 and 
$2.30 plus the stock has closed over the $2.50 level, which could 
have been resistance.  We still see resistance at $2.75 and again 
at $3.00 and traders should use them as guides to evaluate their 
exit plan.  The newsletter will set its stop at $2.38, which 
should protect a 13% gain.  Our risk is the stock gaps down below 
our stop at the open.  Other traders may want to use tighter 
stops or close their position entirely.  If MICT trades up to 
$3.00 intraday we will close the play at $3.00 for a profit.

Picked on December 21st at $ 2.10
Change since picked:        +0.42
Earnings Date               11/12 (confirmed)

HR Closed Plays

  Bearish Plays

Mercator Software - MCTR - close: 7.80 change: -0.08 stop: 7.45

The bulls are slowly losing the game for shares of MCTR.  After 
an incredible run from October into early December the stock just 
can't seem to get its momentum back.  The bears are controlling 
the battle for support or resistance at $8.00 even though the 
bulls are putting up a tough fight.  MCTR dipped to support at 
$7.50 early today before bouncing back but this is the fourth 
consecutive close in four sessions under the $8 level.  The GSO.X 
software index rallied up to its own 200-dma this morning and met 
with selling pressure.  This looks pretty ominous for the group 
and if MCTR breaks down further it could very well see $6.00 
again.  We're going to pull the play now before stopping out for 
a small loss.  

Picked on December 11th at $ 7.68
Gain since picked:          +0.12
Earnings Date               10/30

  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.

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

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:


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.


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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