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Daily Newsletter, Wednesday, 01/02/2002

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PremierInvestor.net Newsletter              Wednesday 01-02-2002
                                                  section 1 of 2
Copyright  2001, All rights reserved.
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In section one:

Market Wrap:      New Year's baby takes first step
Watch List:       CSCO, DLX, MOVI, GILD, TPC, JDSU
Market Sentiment: Spinning wheels on Wall Street
Play-of-the-Day:  Ever Play Black Jack?

-----------------------------------------------------------------
U.S. Market Numbers
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MARKET WRAP  (view in courier font for table alignment)
-----------------------------------------------------------------
      01-02-2002          High     Low     Volume Advance/Decline
DJIA    10073.40 + 51.90 10074.02  9935.70 1.18 bln   1649/1541	
NASDAQ   1979.25 + 25.85  1979.26  1936.56 1.48 bln   1984/1697
S&P 100   588.98 +  4.70   588.98   579.44   Totals   3633/3238
S&P 500  1154.67 +  6.59  1154.67  1136.23             
RUS 2000  487.19 -  1.31   489.85   479.20
DJ TRANS 2619.98 - 20.01  2651.65  2606.16
VIX        23.92 +  0.70    25.26    23.69 
VXN        48.20 +  0.94    50.41    48.05
TRIN        1.02 
Put/Call    0.63
-----------------------------------------------------------------

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

New Year's baby takes first step

Every city across the country has a major media outlet giving 
praise to the mother that gives birth to this year's first 
arrival just after the stroke of midnight on December 31st.  
Monday's and today's trading action was perhaps analogous to some 
mother "holding back" until just after the stroke of midnight 
hoping to grab the headlines that their baby was the first to be 
born just after the new year.

OK, I'm stretching things here with the New Years analogy, but 
early trading action sure didn't look like a young bull was going 
to be stampeding down the street anytime soon.  While today's 
economic had the ISM Index (formerly known as the National 
Association of Purchasing Management) rising to 48.2 in December 
and higher than November's reading of 44.5, the stock market 
didn't immediately react as if the number was that big of a 
positive.  The bond market sure did and we immediately witnessed 
a good round of selling in the Treasury bond market.  Today's ISM 
number was better than economist's expectations for a reading of 
45.8 and as the session progressed, stocks slowly started to 
recover from what looked to be a New Year's hangover.  "The 
recent rebound in the ISM over the past couple of months is 
giving some hope that the economic recovery may come faster that 
is generally found in a major downturn" the ISM said.

The ISM index has been below the 50 level for 17 straight months, 
the longest contraction in the factory sector since the 19 months 
in 1981-1983.  Today's 48.2 reading is the highest reading since 
October of 2000.  A reading below 50 is still a sign that the 
economy is contracting, while a reading above 50 indicates 
expansion.

As the overall ISM number is dissected, new orders hit 54.9 in 
December following a 48.8 reading in November.  Production rose 
to 50.6 from 47.1.  "This suggests that inventory cuts reached 
such an extreme in October and November that a reordering cycle 
has begun, especially in some of the consumer sectors," said John 
Youngdahl, and economist at Goldman Sachs.  "The main question 
now is whether this reordering cycle will be sustained."

Ian Shepherdson, chief U.S. economist at High Frequency Economics 
said, "This is a hugely encouraging report, pointing clearly to a 
vigorous recovery.  No more Fed easing needed here."

Our "tax-loss bounce" got a boost!

On Monday, we profiled shares of TranSwitch Corporation 
(NASDAQ:TXCC) as a bullish trade for those looking to play a 
potential "tax-loss bounce" candidate.  In its most simplistic 
form, this is purely a play on a near-term shift in supply 
demand.  The thinking being that excess supply is present in the 
latter part of the year as investors lock in losses before the 
new year begins.  Then, when that supply is exhausted near-term, 
demand takes over a price moves higher.  This morning's "good 
news" in the Semiconductor sector regarding Hynix Semiconductor 
raising chip prices sure didn't hurt this play.  Add to that a 
spoonful of improving economic data and you've got a baby eating 
strained green peas like it was candy.

TranSwitch Corporation - Daily interval




The first day or two often sets the stage for a tax-loss bounce 
candidate and so far so good for TranSwitch Corporation.  There's 
no way I consider TXCC as a "leader" in the Semiconductor space, 
but today's 11% gain did outpace that of the broader 
Semiconductor Index (SOX.X) and this has me believing that TXCC 
is a good bounce candidate.  With a "tax loss bounce trade" a 
trader wants to set a target, then look to lock in some gains 
once that target is achieved.  There are two ways to do this.  
Sell 1/2 of the position once the target is achieved, and hold 
onto the rest for a higher price or dump it all at your target.

A trader that is playing several tax-loss bounces will have some 
winners and losers.  The key is to keep the losses to a minimum 
(not more than 10% if possible) and let the winners bounce to 
your target.  Other names to consider from our research at 
OptionInvestor.com are (INKT, NTG, TORC, TMR, MSSN, ATPG, FIRE, 
CORV, AETH, ADCT, NEWP, AKAM).

On thing I like to do is start out with one or two "tax-loss 
bounce" candidates.  Once I get some success, then review my 
candidate list.  A trader that likes what they are seeing in TXCC 
may want to take a look at shares of Newport Corporation 
(NASDAQ:NEWP).  All I'm doing here is looking for a stock where 
the demand side of things is outstripping supply and that demand 
should have price continuing to rise.

Newport Corporation Chart - 




Today, shares of Newport (NEWP) broke just above an "inside day" 
from Monday at $19.98.  The point and figure chart shows a 
potential quadruple-top buy signal at $21.  With MACD just 
crossing above its signal I like a bullish trade setup in this 
one.  Start out with a stop at $18.25 and near-term target of 
$24.  If the stock pops to $22 on light volume, I'd be somewhat 
skeptical of any follow through.  However, if we were to get some 
good volume on an upward move, then a trader could begin moving 
his stop up under the levels of retracement.

Friday's thoughts come to fruition?

Oil stocks got "whacked" today as the Oil Service Index (OSX.X) 
lead sector losers with a 4.2% decline.  This may have been a 
fear of mine from last Friday and past comments regarding this 
sector.  Those darned OPEC production cuts just seem to catch up 
with the group not long after a production cut is announced.  It 
will have to remain my view that these OPEC cuts just aren't good 
for oil service stocks.  That doesn't mean there aren't some good 
short-term trades to be had in the group, but when an oil service 
stock moved some 15% in a week or two, we need to be taking some 
profits off the table.  Once we start seeing some production 
increases from OPEC, then this group will most likely start 
seeing a more sustainable upward trend.

Not helping matters was today's downgrade of BJ Services 
(NYSE:BJS) by JP Morgan to "market perform" from "long-term buy" 
based on valuation.  Shares of BJ Services (BJS) finished the 
session at $30.15 (-7%) and just like that, the stock is right 
back where we first got bullish.  It's interesting that JP Morgan 
felt an investor might want to roll out of BJS and into shares of 
Hanover Compressor (NYSE:HC).  Shares of HC fell 6% to $23.72 and 
the chart of this stock is not as technically strong as that of 
BJ Services.

My current advice for subscribers that just can't take any heat 
to the downside near-term, may want to play some defense in the 
OIL SERVICE sector right now.  I do think that today's negativity 
toward BJS was due to JP Morgan's downgrade and there were some 
bulls that parted with profits or took a small loss.  With the 
"uncertainty" of near-term impact of production cuts still taking 
place at OPEC, a trader with a small profit or break-even that 
doesn't want to risk the sell signal at $27 should part here at 
$30.15.

I wouldn't put a lot of "faith" in JP Morgan's bullish call on 
HC.  I'm not sure when JP Morgan raised BJS to a "long-term buy" 
and today's downgrade comes just at the start of the New Year.  
If they upgraded the stock at $18, then today's downgrade marked 
to Monday's close of $32.45 may have been a way for the analyst 
to lock in a gain early in the year and a chance to speculate 
with some profits in HC and a stock that looks to be a laggard in 
the oil service related group.  If I'm going to sell one of the 
strongest stocks in the oil service sector (based on current 
market action) I'm not going to roll money into a weaker stock in 
the sector.  JP Morgan stated part of the reason for the 
downgrade was BJ Services exposure to the natural gas segment of 
the service sector.  That's exactly where Hanover Compressor 
(NYSE:HC) has exposure.

Energy prices

The March 2002 Light, Sweet Crude Oil future contract (cl02h) 
jumped 6.16% to $21.35 per barrel today.  Action here is somewhat 
close to what we talked about last week regarding OPEC cuts.  
OPEC wants oil above the $20 per barrel and last Friday's cut 
looks to be doing that here.  Near-term, this action should have 
a greater impact on energy producers from the bullish side.  Late 
today, the American Petroleum Institute (API) said unleaded 
gasoline supplies fell by 312,000 barrels during the week ended 
December 28th.  Crude inventories fell by 2.45 million barrels.  
Time Evans, senior energy analyst at IFR Pegasus in New York 
expected inventories to drop by as much as 5-7 million barrels, 
so today's API report doesn't look like draw downs were as 
aggressive as Mr. Evans thought they might be.  Some oil 
commodity analysts feel that the decline in crude related 
stockpiles after the OPEC cuts should bode well for a firming oil 
price as supply is being cut back on OPEC's end.

The March 2002 Natural Gas futures contract (ng02h) fell to a new 
low of $2.46/btu (British Thermal Units).

Both the CBOE Oil Index (OIX.X) and AMEX Natural Gas Index 
(XNG.X) fell fractionally in today's trading, but substantially 
less than the losses found in the Oil Service Index (OSX.X).

Networking was working

In Friday's wrap, we felt the Networking Index (NWX.X) might be 
the place for equity bulls to be focusing this week.  While the 
group did decline fractionally on Monday, today's 5.4% gain had 
this sector posting the biggest gain.  We thought a bullish 
trader might start out light in a bullish position with Cisco 
(NASDAQ:CSCO) near $18.50.  Today's 6% gain in Cisco (CSCO) to 
$19.23 has the stock back above a rising 50-day MA and edging 
just above retracement of $19.20.  Volume was light today at 102 
million shares, but this was the case for the broader market.  I 
wouldn't add further to a position at this time if long near 
$18.50.  I still don't like the fact that the NASDAQ-100 bullish 
percent is "bear confirmed."  If we get a reversal back higher in 
this indicator, then I more apt to begin averaging up.  
Nonetheless, a bullish trade looking for some exposure to the 
networking sector should be looking at CSCO in my opinion.

Bond market action

Today's Treasury bond market response to the economic data was 
positive in my view.  After the release of today's ISM data, the 
bond market saw selling and that selling continued into the 
close.  For the third time since December 12th, the 10-year YIELD 
has moved higher after approaching the 5% YIELD level.  Today's 
close on the 10-year YIELD was 5.157%.  My feeling here is that 
as long as the 10-year YIELD stays above the 4.9% level, equity 
bears are going to be rather nervous in stocks they're shorting.  
If nothing else, it will have them locking in gains when they get 
them on sudden drops.  The perception here seems to be that there 
is still a lot of money that has been taken out of the bond 
market in recent months and some of the stronger than expected 
economic data is making a case that the Fed may not be cutting 
rates anytime soon.

If the bond market is telling us anything, it is that the Fed may 
indeed be at the end of its easing cycle.  The only reason the 
Fed is going to stop cutting rates is that it feels the recent 
stimulus started on January 3, 2001 is beginning to have an 
impact on the economy.

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.

----------

Cisco Systems, Inc - CSCO - close: 19.23 change: +1.12

WHAT TO WATCH: The networking giant turned in a nice day to start 
the new year off right.  The stock had been range bound the last 
several sessions of 2001 but this allowed the stock to build a 
base of support at $18 and its 200-dma at 17.85.  The close today 
put shares back above price resistance at $19 and its 50-dma.  
The MACD is about to turn positive as well and could be a sign of 
a new leg up in the works.  Interested traders may want to 
evaluate an entry point here and but keep in mind that the $20 
level could also be an obstacle.  We would aim for resistance at 
$22.  CSCO should announce earnings near Feb. 6th, 2002.




---

Deluxe Corp - DLX - close: 41.15 change: -0.43

WHAT TO WATCH: DLX has been a big winner for investors over 2001 
with small steady increases day after day really adding up.  This 
pull back towards the $40 level may be an entry point if the 
trend will continue.  The stock is very overbought longer-term 
but shares just keep climbing.  If this fits your risk profile 
consider look for a bounce at $40 or confirmation of the trend 
with shares closing back over $41.50.




---

Movie Gallery, Inc - MOVI - close: 21.10 change: -3.26

WHAT TO WATCH: Shares of MOVI produced a high volume breakdown 
below support near $22.50 (and $22).  There was no news on the 
day but this breakdown looks very negative for the stock price.  
This produced a new sell signal in the point-and-figure chart.  
Traders may want to watch it for a break below the $20 level.




---

Gilead Sciences, Inc - GILD - close: 61.43 change: -4.29

WHAT TO WATCH: Shares of GILD also produced a high volume 
breakdown on the first trading day of 2002.  The stock lost 6.5 
percent and closed under previous support of $62.  We would watch 
it for confirmation and a break below the $60 mark.  GILD is 
expected to announce earnings on Jan. 31st, 2002.




---

Triton PCS - TPC - close: 27.45 change: -1.90 

WHAT TO WATCH: The painful downtrend for Triton continues into 
2002.  This wireless communication stock has been disappointing 
shareholders for months as the stock slowly bled lower and lower.  
Today's drop puts it below support near $28.  Active traders may 
be able to scalp another day or two before the stock bounces back 
to resistance near its 30-dma where bears have been pouncing 
every time.





==============
STILL WATCHING
==============

JDS Uniphase Corp - JDSU - close: 9.13 change: +0.45

UPDATE: Shares of JDSU have put together back to back gains and 
Wednesday's move conquered the $9.00 level of resistance again.  
The MACD is slowly turning around but there is still plenty of 
resistance overhead.  Only aggressive traders should consider 
long positions at this entry point.  Watch out for its 50-dma at 
9.58.

- Last Watch List Comment on Monday, Dec. 31st, 2001 -

WHAT TO WATCH: Shares of JDSU turned in a 3% gain to end 2001 but 
shares only got as far as its 15-dma near $9.00 before 
encountering selling pressure and rolling over towards the 
closing bell.  Traders will certainly be watching JDSU come 
January.  If shares close under $8.00 it might make a good short 
candidate with potential support at $7 and again at $6.  If the 
stock can close over $9.00 it could be a long candidate although 
there is a lot of potential resistance above it.  A move over $10 
would be stronger confirmation and may still allow traders a 
chance to catch any move to resistance near $12.






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

Spinning wheels on Wall Street.
by Russ Moore

Late day tech buying turned red arrows green, giving the markets 
a positive start to the New Year.

The DOW ended with a gain of +0.5 percent while the NASDAQ added 
+1.5 percent and the NDX +2.1 percent. The modest gains did not 
come easy however, as the major indices were stuck in reverse, or 
neutral, for much of the day. 

News that a Federal judge was going to allow Microsoft (MSFT) to 
argue in court why it’s entitled to a 4-month delay in hearings 
on proposals for tougher penalties in the antitrust case was one 
of two tech catalysts for today’s action. The other came from 
South Korea’s Hynix Semiconductors Inc. which announced its’ 
third price hike in a month, taking hopes of a chip rebound to a 
new level.

Volume continued on the weak side with 1.17 billion shares moving 
on the big board and 1.49 billion on the NASDAQ. Winners out-
dueled losers by a 16/15 count on the NYSE and 20/17 on the tech 
index.

Broader markets saw airlines and utilities come out on top while 
the tech side featured strong performances in hardware, chip and 
networkers. Oil service and biotech were the weakest links on the 
day.

The big economic news came from the newly named Institute of 
Supply Manufacturing Index (formerly NAPM). The ISM announced the 
index level had risen from 44.5 in November, to 48.2 in December, 
far better than the 45.5 forecast. In addition, new orders and 
production sub-indexes moved above the 50-mark, an indication of 
expansion. The surprisingly strong data will likely see the Fed 
moving to a hold position for the next FOMC meeting.

A continuation of light-volume days means the big players are 
enjoying extended holidays and therefore, reading too much into 
current action would not be advisable. The rubber will hit the 
road when we start hearing how corporate earnings are shaping up. 
Until then, expect to see the sideways shuffle continue.


Wednesday 01/02 close: 23.92


VXN
Wednesday 01/02 close: 48.20


30-yr Bonds
Wednesday 01/02 close: 5.56


Total Put/Call Ratio: .81


Equity Option Put/Call Ratio: .60


Index Option Put/Call Ratio: 2.57


===

NASDAQ 100 Index (NDX/QQQ)
52-Week High: 103.51
52-Week Low:   28.19
Current close: 40.11

Volume/Open Interest
Maximum calls: 40/132,142
Maximum puts : 40/ 91,113

Moving Averages
 10 DMA 39
 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: 588.98

Volume/Open Interest
Maximum calls: 590/4,522
Maximum puts : 520/5,256
Moving Averages
 10 DMA  587
 20 DMA  585
 50 DMA  579
200 DMA  599

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: 1154.67

Volume / Open Interest
Maximum calls: 1150/38,742
Maximum puts : 1150/31,811
Moving Averages
 10 DMA 1149
 20 DMA 1146
 50 DMA 1128
200 DMA 1166

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: 10,073.40

Volume / Open Interest
Maximum Calls: 100/14,018
Maximum Puts   100/29,411

Moving Averages:
 10 DMA 10,039
 20 DMA  9,979
 50 DMA  9,749
200 DMA 10,091

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: 571.22

Volume / Open Interest
Maximum Calls: 660/  368
Maximum Puts:  580/2,781

Moving Averages
 10 DMA 585
 20 DMA 584
 50 DMA 577
200 DMA 538

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: 545.44

Volume / Open Interest
Maximum Calls: 440/1,426
Maximum Puts:  500/2,310

Moving Averages
 10 DMA 530
 20 DMA 547
 50 DMA 518
200 DMA 554

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: 381.00

Volume / Open Interest
Maximum Calls: 400/525
Maximum Puts:  360/510

Moving Averages
 10 DMA 383
 20 DMA 384
 50 DMA 390
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, 12/28. 
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 
12/11/01     367,397   429,640   (62,243)    2.6%
12/18/01     391,995   456,968   (64,973)    4.3%
12/25/01     412,581   471,239   (58,658)   (9.7%)

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
12/11/01       158,490    86,717    71,773    (1.4%)
12/18/01       158,300    80,507    77,793     8.4%
12/05/01       152,521    79,444    73,077    (6.1%)

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 
12/11/01      45,468    51,392    (5,924)  (35.9%)
12/18/01      55,276    58,433    (3,157)  (46.7%)
12/25/01      55,250    47,476     7,774   
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
12/11/01       12,425    11,754      671     (81.0%)
12/18/01       17,649    18,626     (977)   
12/25/01       15,810    25,687   (9,877)

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 
12/11/01      23,135    12,576   10,559     (1.7%)
12/18/01      21,919    13,810    8,109    (23.2%)
12/25/01      15,492     7,335    8,157       .6%

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
12/11/01       3,469     9,065    (5,596)     (8.6%)
12/18/01       6,790    10,943    (4,153)    (25.8%)
12/25/01       4,293     9,086    (4,793)     15.4%
 
Most bearish reading of the year:  (7,572) - 5/08/01
Most bullish reading of the year:   1,909  - 1/16/01


                    Small Specs               Commercials
S&P 500         (Current)  (Previous)     (Current) (Previous)
Open Interest
Net Value        +73,077     +77,793        -58,658     -64,973

Total Open
Interest %       (+31.50%)  (+32.58%)      (-6.64%)   (-7.65%)
                 net-long   net-long       net-short  net-short


                     Small Specs             Commercials
DJIA futures     (Current) (Previous)    (Current) (Previous)
Open Interest
Net Value          -4,793     -4,153          +8,157    8,109
Total Open
interest %       (-35.82%)    (-23.42%)      (+35.73%)  (+22.70)
                 net-short   net-short     net-long    net-long


                     Small Spec              Commercials
NASDAQ 100      (Current) (Previous)    (Current) (Previous)
Open Interest
Net Value         -9877      -977         +7,774    -3,157

Total Open
Interest %        (-23.80%)   (-2.69%)     (+7.49%) (-2.78%)
                 net-short   net-short      net-long net-short


What COT Data Tells Us
----------------------
Indices:.We’ve seen a major move by the Commercial players on the 
NASDAQ 100 this week. The Commercials have gone net-long while 
the Small Specs added to their net-shorts. This would seem to be 
a bullish move for the tech side however, we still see the 
Commercials holding their net-short positions on the SPX, the 
favored vehicle, and usually a better barometer of overall 
Commercial sentiment.

Gold: No significant changes this week.

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
12/25 11,976 contracts net-short

Data compiled as of Tuesday 12/25 by the CFTC.



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

Newport Corp - NEWP - close: 20.25 change: +0.97 stop: 18.49

Company Description:
Newport Corporation is a global leader in the design, manufacture 
and marketing of high precision components, instruments and 
integrated systems to the fiber optic communications, 
semiconductor equipment, aerospace and research and general 
metrology markets. The company's innovative products are designed 
to enhance productivity and capabilities in test and measurement 
and automated assembly for precision manufacturing, engineering 
and research applications. Customers include Fortune 500 
corporations, technology companies and research laboratories in 
commercial, academic and government sectors worldwide.
(source: Company Press Release)

Why We Like It:
We debated on whether or not to include this play for NEWP in the 
high risk/high reward section or the tech stock section.  The 
company makes precision equipment for the multiple sectors but 
focuses on the fiber optics equipment and the semiconductor 
equipment sectors.  According to their latest earnings report in 
October, sales of fiber optic equipment had dropped 54 percent 
while sales of semiconductor equipment had risen 33 percent.  
This shift has probably played a roll in how shares of NEWP react 
to movement in the semiconductor sector and the SOX.X index.  

The debate between placement in the HR section or just the Tech 
stock section centered on the fate of the SOX.  The SOX had a 
pretty nice day to start out 2002.  The index gained 23 points to 
add 4.45% and closed over the 540 level.  The Monday/Wednesday 
move looks like a clean bounce off the index's 50-dma.  The 
problem lies in overhead resistance at 550 and the 200-dma at 
555.  The bulls will focus on the MACD, which is about to turn 
positive, but the chip sector could be looking at some tough 
selling pressure to work through.  

Fortunately, NEWP looks a bit more optimistic than the SOX but it 
too has resistance at $21.  A glance at the point-and-figure 
chart shows that if NEWP can trade above $21 it would be a major 
technical breakout.  The bullish close over $20 today is our 
trigger to go long but more conservative traders may want to wait 
for shares to conquer $21 first and just adjust your exit point.  
We're going to aim for $22 as our initial target.  We'll start 
with a stop at $18.49.  The last couple of days NEWP has shown 
strength at $19.20 so we feel we're giving it enough room.  More 
aggressive traders may want to put their stop under $18.  Confirm 
stock direction and don't be afraid to take profits when you get 
them.  FYI, we don't have an earnings date yet for January but 
suspect NEWP will announce in the latter half of the month.

Picked on January 2nd at $20.25
Change since picked:      +0.00
Earnings Date          10/17/01 (confirmed)






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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

*****************************************************************
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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 01-02-2002
                                                   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/3571_2.asp
=================================================================

In section two:

Net Bulls (tech stocks)
  New Bullish Play:          NEWP
  Bullish Stop Adjsutments:  SFA
  Closed Bullish Plays:      CEPH, ITRI

Stock Bottom (non-tech stocks)
  Closed Bullish Plays:      CBRL, JCP
  
High Risk/Reward
  Bullish Stop Adjsutments:  TXCC
  Closed Bullish Plays:      IMNY

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

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

Newport Corp - NEWP - close: 20.25 change: +0.97 stop: 18.49

Company Description:
Newport Corporation is a global leader in the design, manufacture 
and marketing of high precision components, instruments and 
integrated systems to the fiber optic communications, 
semiconductor equipment, aerospace and research and general 
metrology markets. The company's innovative products are designed 
to enhance productivity and capabilities in test and measurement 
and automated assembly for precision manufacturing, engineering 
and research applications. Customers include Fortune 500 
corporations, technology companies and research laboratories in 
commercial, academic and government sectors worldwide.
(source: Company Press Release)

Why We Like It:
We debated on whether or not to include this play for NEWP in the 
high risk/high reward section or the tech stock section.  The 
company makes precision equipment for the multiple sectors but 
focuses on the fiber optics equipment and the semiconductor 
equipment sectors.  According to their latest earnings report in 
October, sales of fiber optic equipment had dropped 54 percent 
while sales of semiconductor equipment had risen 33 percent.  
This shift has probably played a roll in how shares of NEWP react 
to movement in the semiconductor sector and the SOX.X index.  

The debate between placement in the HR section or just the Tech 
stock section centered on the fate of the SOX.  The SOX had a 
pretty nice day to start out 2002.  The index gained 23 points to 
add 4.45% and closed over the 540 level.  The Monday/Wednesday 
move looks like a clean bounce off the index's 50-dma.  The 
problem lies in overhead resistance at 550 and the 200-dma at 
555.  The bulls will focus on the MACD, which is about to turn 
positive, but the chip sector could be looking at some tough 
selling pressure to work through.  

Fortunately, NEWP looks a bit more optimistic than the SOX but it 
too has resistance at $21.  A glance at the point-and-figure 
chart shows that if NEWP can trade above $21 it would be a major 
technical breakout.  The bullish close over $20 today is our 
trigger to go long but more conservative traders may want to wait 
for shares to conquer $21 first and just adjust your exit point.  
We're going to aim for $22 as our initial target.  We'll start 
with a stop at $18.49.  The last couple of days NEWP has shown 
strength at $19.20 so we feel we're giving it enough room.  More 
aggressive traders may want to put their stop under $18.  Confirm 
stock direction and don't be afraid to take profits when you get 
them.  FYI, we don't have an earnings date yet for January but 
suspect NEWP will announce in the latter half of the month.

Picked on January 2nd at $20.25
Change since picked:      +0.00
Earnings Date          10/17/01 (confirmed)






===================
NB Stop Adjustments
===================

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

Scientific Atlanta - SFA - cls: 25.06 chg: +1.12 stop: 23.24*new*

We are inching up our stop on SFA to $23.24, which is 12 cents 
below its 10-dma.  The stock bottomed at $23.75 on Monday and 
today's low was $23.75 so we don't expect shares to dip very far.  
The close above $25 is encouraging for the bulls.  The company 
also confirmed that they would announce earnings on Jan. 17th, 
2002 after the bell.

Picked on December 28th at $24.73
Change since picked:        +0.33
Earnings Date            01/17/02 (confirmed)






===============
NB Closed Plays
===============

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

Cephalon, Inc - CEPH - close: 72.70 change: -2.88 stop: 73.85

Ouch!  What happened?  On Friday the BTK.X biotech index looked 
very bullish and ended the week with a close over the 600 level.  
Likewise, shares of CEPH had enjoyed a very strong week and 
closed near its high on Friday after bouncing near the $75 level 
on Thursday, Dec. 27th.  When Monday rolled around investors used 
the last trading day of the year to take profits, which sent the 
Nasdaq, the BTK.X and CEPH lower early in the session.  
Unfortunately, the selling continued on Wednesday with the BTK.X 
falling very fast to a low of 557 before fighting back through 
the remainder of the day.  CEPH also fell quickly today but 
didn't have as strong a rebound as the index.  This leads us to 
believe there may be more profit taking to come for the stock and 
bullish investors may want to wait and see if CEPH finds support 
at the $70 level before considering a play.

Picked on December 28th at $77.58
Gain since picked:          -3.73
Earnings Date            02/05/02 (unconfirmed)




---

Itron Inc - ITRI - close: 25.80 change: -4.50 stop: 28.79

Welcome to 2002 but you'd better watch out for that truck!  
Someone or multiple someone decided that they wanted out of ITRI 
and they wanted out badly and today.  The profit taking on Monday 
with the drop back to support near $30 was not that bad.  It 
allowed for some year-end profit taking and a new entry point for 
anyone looking for a bounce at $30.  I just hope they waited for 
the bounce because it never came.  The weakness in the broader 
markets this morning kept the stock drifting lower on Wednesday 
but something happened after 2:00 p.m. ET that sent the stock 
falling.  A huge amount of volume came in and it must have all 
been sell orders.  Normal volume is only 320K but today's was 
over 1M.  Check out a five-minute chart and see how the volume 
just poured in.  With out any news for the company that might 
induce this sort of response the obvious suspects are mutual 
funds looking to capture a gain but have it show up in 2002.  The 
close under the 50-dma is negative as is the big volume but 
shares might see some support (don't know how long it will last) 
at the $25 level.  If something does surface that warrants this 
reaction ITRI may trade to its 200-dma near $20.  Be careful.  
Our gain of $1.20 has turned into a loss of $2.01.

Picked on December 27th at $30.80
Gain since picked:          -2.01
Earnings Date            02/06/02 (unconfirmed)






==================================================================
StockBottom/Active Trader (AT) section
==================================================================

===============
AT Closed Plays
===============

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

CBRL Group Inc - CBRL - close: 29.05 change: -0.39 stop: 28.99

Year-end profit taking is also to blame for reversing Friday's 
bullish breakout in CBRL.  The stock had been out performing many 
of its peers and closed at a new high on Dec. 28th.  Monday's 
profit taking was not a surprise considering it was the last 
trading day of 2001 but CBRL still managed to close on its 15-
dma, which had been acting as short-term support.  The early 
morning weakness in the broader indices combined with more 
weakness in other big name restaurant stocks helped pull CBRL 
lower and stopping us out at $28.99.  Shares did rebound somewhat 
and closed back over the $29 level but we will wait for 
confirmation that this is not the beginning of a new trend before 
evaluating any new long plays.  More aggressive traders may 
consider positions but if CBRL can't reclaim the $30 level the 
bulls may be in trouble.

Picked on December 28th at $30.46 
Gain since picked:          -1.47
Earnings Date            11/21/01 (confirmed)




---

JC Penney - JCP - close: 26.20 change: -0.70 stop: 26.19 

We knew it would happen sooner or later and frankly I'm surprised 
the rally lasted as long as it did.  We kept inching our stop up 
in our JCP play and the stock kept climbing higher.  Nice work 
when we can get it.  The RLX.X retail index had been on a very 
strong rally in December and this Monday/Wednesday produced a two-
day pull back as investors took some profits.  Bulls should be 
encouraged that the index did manage to close over the heavy 
resistance level (now support) of 920.  This may be a short-term 
entry point for new bullish plays but probably not on JCP.  JCP's 
big up day on Friday, the doji-like candlestick produce on Monday 
and the down candle today looks pretty ominous.  On the positive 
side the stock did close above what should be new support at $26 
but we would expect a bit more profit taking for the stock.  We 
are closing the play with a move of $3.11 or 13%.

Picked on December 13th at $23.08
Gain since picked:          +3.11
Earnings Date               02/12 (unconfirmed)






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

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

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

TranSwitch Corp - TXCC - close: 5.00 change: +0.50 stop: 3.98

Our new play on TXCC is off to a strong start today as shares 
added over 11% on strong volume.  The stock closed right at the 
$5.00 mark, which could be new resistance.  We were tempted to 
adjust our stop higher but if you read Jeff's comments in the 
wrap we're going to let this one run another day and then 
evaluate our stop.  More conservative traders might want to 
consider a stop under $4.50 and very conservative traders might 
want to try and protect some of their profits.

Picked on December 31st at $ 4.50
Change since picked:        +0.50
Earnings Date            01/17/02 (unconfirmed)






===============
HR Closed Plays
===============

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

I-many, Inc. - IMNY - close: 9.25 change: -0.40 stop: 9.18

IMNY was another bullish play that betrayed us in the two-day 
pull back produced with year-end profit taking and new year 
weakness today.  The stock actually traded to 10.60 on Monday 
before pulling back to its 200-dma near 9.38.  After closing off 
its lows on Monday we had stronger expectations for IMNY but 
shares fell through its 200-dma and traded to the $9 level before 
bouncing again.  We could have placed our stop at $8.99 but we 
felt $9.18 was already wider than we liked.  Aggressive traders 
may want to look for a bounce from here with a tight stop under 
$9 but we would prefer to see IMNY back over its 200-dma and back 
over the $10 level.  Trade carefully.

Picked on December 28th at $10.20
Gain since picked:          -1.02
Earnings Date            10/25/01 (confirmed)







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

KIM     Kimco Realty Corp          33.20     +0.51
CAL     Continental Airlines       27.60     +1.39
RUS     Russ Berrie & Co Inc       30.98     +0.98
TTC     Toro Co                    46.01     +1.01
MESA    Mesa Air Group Inc          8.10     +0.58

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

GSPN    Globespan Inc              15.61     +2.66
VSNX    Visionics Corp             16.30     +1.87
RADS    Radiant Systems Inc        13.00     +1.50

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

DCX     Diamlerchrysler            43.48     +1.81
AAPL    Apple Computer Inc         23.30     +1.40
SSP     E.W.Scripps Co             67.80     +1.80
NCR     Ncr Corp                   38.25     +1.39
MW      Men's Wearhouse Inc        21.90     +1.25
ENZ     Enzo Biochem Inc           24.55     +1.05

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

TYC     Tyco Intl. Ltd             57.25     -1.65
BSX     Boston Scientific Corp     22.75     -1.37
INFY    Infosys Technologies       58.96     -3.04
SU      Suncor Energy              30.61     -2.33
YUM     Tricon Global              47.99     -1.21

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

SLB     Schlumberger Ltd           53.43     -1.52
BHI     Baker Hughes Inc           35.56     -0.91
HRB     H&R Block Inc              43.69     -1.01
BJS     BJ Services Co             30.15     -2.30
NE      Noble Drilling Corp        32.55     -1.49
MYL     Mylan Laboratories Inc     36.20     -1.30





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