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Daily Newsletter, Thursday, 01/03/2002

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PremierInvestor.net Newsletter               Thursday 01-03-2002
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In section one:

Market Wrap:      Made a list and checking it twice
Market Sentiment: Wall Street pulls up its’ Sox.
Play-of-the-Day:  Dabbling In Telecom

-----------------------------------------------------------------
U.S. Market Numbers
-----------------------------------------------------------------
MARKET WRAP  (view in courier font for table alignment)
-----------------------------------------------------------------
        1-3-2002           High     Low     Volume Advance/Decline
DJIA    10172.14 + 98.74 10174.01 10051.95  1.4 bln   2106/1052
NASDAQ   2044.27 + 65.02  2044.56  1987.06  2.1 bln   2288/1353
S&P 100   595.13 +  6.15   595.13   588.61   Totals   4394/2405
S&P 500  1165.27 + 10.60  1165.27  1154.01
RUS 2000  495.51 +  8.32   495.52   487.19
DJ TRANS 2727.50 +107.52  2727.50  2620.91
VIX        22.83 -  1.09    24.19    22.82
VXN        47.07 -  0.98    48.78    46.63
TRIN        1.52
Put/Call Ratio       .68
-----------------------------------------------------------------

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

Made a list and checking it twice

Wow!  Our last two "tax-loss bounce" candidates have gone 
ballistic.  Can traders make it three for three?  We're willing 
to play a pattern if you are.  We've made a list and this one 
looks like she could make a move higher too.

ADC Telecommunications Chart - Daily Interval




Here's a similar pattern in ADC Telecommunications (NASDAQ:ADCT) 
that we've been looking at in TranSwitch (NASDAQ:TXCC) from 
Monday evening and Newport Corporation (NASDAQ:NEWP) last night.  
Both stocks have had some nice gains in past session or two.  
Notice the volume spike prior to a move higher, then a "settling 
back" into the end of the year, then some consolidation and the 
beginning of a move higher.

Newport Corporation Chart - Daily Interval




What a day for bullish traders that took today's "play of the 
day" in shares of Newport Corporation (NASDAQ:NEWP).  The stock 
gapped marginally higher at the open of trading.  For about 3-
hours the stock was stuck at the $22 level (61.8% retracement), 
but when she broke through the stock packed on some gains into 
the close.  I think a trader should be raising stops in this one 
to just under the $22.35 level.  The reason I think this way is 
that we have about $1 upside to 200-day (previously identified 
target) and stop at $22.35 is risking $1 from today's close.  
With this strategy, we try and preserve the bulk of the gain, but 
still give the stock some room to try and work higher.

Don't get carried away!  Remember, we want to try and lock in 
some early gains and rotate to some other patterns as they 
develop.  TranSwitch (NASDAQ:TXCC) is up more that 20% in the 
past two sessions.  I don't think this move is a "revelation" 
from the market that TXCC is the most fundamentally strong stock 
in the semiconductor sector.  TXCC is bouncing per our scenario.  
Don't be ashamed to take some profits, and then rotate some of 
that capital to another idea if you're comfortable with it.  I 
don't think it is wise to have a portfolio or trading account 
full of "tax-loss bounce" candidates.

If you've been putting $1,000 into each stock, don't all of a 
sudden put $2000 into the next candidate thinking, "this one is 
going to do the exact same thing and jump another 10%."  It's 
much better to wish I had invested more capital in a trader that 
worked in my favor than wishing I hadn't invested as much as I 
did in a trade that went against me.  Stay disciplined!

Definitely a technology day.

Make no bones about it.  Today was a bullish tech day and the 
Semiconductor Index (SOX.X) surged some 8.2%.  To me this is a 
great surprise, but also a pleasant one (see TranSwitch).  When 
the Semiconductor Index (SOX.X) broke above its 200-day moving 
average, all heck broke loose and it sure looks as if some bears 
rushed to cover.  Not long ago I had mentioned a short play in 
Broadcom (NASDAQ:BRCM) near $43.  The stock fell to $37, then 
rebounded back to $43, but today broke above the $45 level.  In 
past commentary I thought even bearish traders (regardless of 
sector) needed to be trading for profits.  That sure turned out 
to be the case.  When Broadcom (BRCM) broke back above the $45 
level today, any traders still short the stock should have 
stopped out.  Just goes to show I'm not right all the time and 
have never claimed to be.  I talk about a lot of stocks in the 
intraday commentaries and sometimes when action gets hot like it 
was today, it's hard to remember when I mentioned a particular 
stock (date and time).  Review the 12/20/01 01:00 Update for what 
we had been looking at in BRCM.  Note how stock traded right down 
to that "lower end of Channel" trend.  Stock bounced like a 
rubber ball from there and now resides right at upper end of 
channel.  When I get stopped out of a trade for a loss, I'm not 
real eager to get involved in a similar trade so soon after I've 
stopped out.

The Networking Index (NWX.X) also had a banner day with a 5.9% 
gain as shares of Cisco Systems (NASDAQ:CSCO) jumped better than 
7% to $20.76.  This is a stock we started mentioning in 
commentary again recently as a bullish candidate.  The stock 
never made it to our play list, but traders/investors that did 
nip away at this one from the bull side should be doing well.  
The stock found some good volume today (91 million shares) on the 
break above recent consolidation of $18-$19.  I would have stop 
set at a minimum of $17.50 from here.  I like the way MACD on the 
daily chart is turning higher, so I'm a little more apt to give 
this one some room that I would be with some other stocks in the 
sector.  Cisco is my "bellwether" of the networking stocks (it is 
for most).  I was rather patient with this one and watched her 
climb from $12 to $21.90 and the recent pullback to $19 was a 
level I felt was the "safest" for entry.  Will now want to see 
the stock set a new relative high above $22 and hint that demand 
continues to build for the stock.

OK, it wasn't all technology

In the December 18th "Market Wrap" we had our seatbelts on and 
both hands clamped on the steering wheel of our Mac truck.  
Today's move above the 200-day MA by the Dow Jones Transportation 
Index (TRAN) was impressive and now looks to have this group 
breaking through a roadblock that has been in place for the past 
two weeks.  I view today's move higher as a "vote of confidence" 
from the MARKET that the economy is truly beginning to recover.

Dow Jones Transportation Average Chart - Daily Interval




This may be the most important technical event that took place 
today.  It is believed by many that the transports are the true 
test of a growing economy.  If they do well, then the economy 
should be doing well.  Today's move above the 200-day will have 
some bears scratching their heads, and wondering just what the 
heck is going on.  Tomorrow an equity bull would like to see this 
group continue with a strong move higher and give some 
confirmation to the thought of an economic recovery.

Trucking Stocks - Sorted by volume




This isn't a complete list of "trucking stocks," but it gives us 
a good idea of what took place today.  If you compare this list 
to the one from the December 18th market wrap, you'll note that 
many of these stocks are trading at levels pretty close to 
December 18th.  On December 18th we highlighted shares of CNF 
Inc. (NYSE:CNF) at $30.93 and the next day (Dec. 18th) that stock 
jumped to $32.90.  CNF has been parked at the weigh station for 
past couple of weeks.  If the TRAN makes a continued move higher, 
then CNF may get back on the high road tomorrow for a second leg 
of its trip higher.

Airline Stocks - Sorted by volume




Trucking stocks aren't the only "transportation" segment that has 
been moving in the past couple of weeks.  Today the AMEX Airline 
Index (XAL.X) jumped 5.84% and helped drive transports higher.  
The list above is that of airline stocks and it is NOT the 
components of the Airline Index XAL.X.  One thing I might point 
out is how the above list (sorted by volume) seems to indicate 
that some of the stocks that don't trade a lot of volume may not 
necessarily participate in a groups move.  Institutions tend to 
shy away from more illiquid stocks or even some of the lower 
priced stocks in a group.  I personally prefer to focus the bulk 
of my trading in stocks where institutions like to trade/invest.  
From time to time I'll trade a less liquid stock, but only in 
certain circumstances and stocks that I've been monitoring for an 
extended period of time.  

Shares of Southwest Airlines (NYSE:LUV) $18.91 look interesting 
and might warrant a bull's attention if looking for some airline 
exposure.  The stock recently traded the $20 level and pulled 
back near a now flattening 200-day MA $17.79 and a trending 
higher 50-day MA at $18.  The point and figure chart gives us a 
bullish vertical count of $25.  LUV has been one of the stronger 
standouts in the group since its gap down to near $12 after the 
terrorist attacks.  A move above the $19 level could see a near-
term test of $20.

Interesting conversation, but it sounds familiar

Late this afternoon, I was listening to an interview with JP 
Morgan Chase's chief equity strategist Douglas Cliggott.  He was 
one of the first Wall Street analysts to publicly warn investors 
about a pending decline in late 2000.  Mr. Cliggott still isn't 
convinced the U.S. stock market is in for a steady rise higher.  
One thing that caught my ear was the "historical" correlation 
between higher oil prices and a strong economy.  Mr. Cliggott 
seemed to think, "If the economy is truly in the recovery mode, 
then energy stocks should be the best value in the market."  

This is something we have been talking about in recent weeks.  
The past two trading sessions have been a little rough on some of 
the energy stocks.  I don't see any glaring alerts of pending 
doom, but I do think Mr. Cliggott's thoughts are worth mentioning 
as it relates to past commentary.  

If anything, I do take Mr. Cliggott's to heart.  Not because he 
is saying some of the same things we have been in our commentary 
regarding energy stocks (oil, natural gas and oil service), but 
how they should be performing in the scope of an economic 
recovery.

I'd also use Mr. Cliggott's comments about the energy as a dose 
of smelling salts for those subscribers that think today's action 
is a sign of smooth waters and blue skies.  For the most part, 
I'm very happy with the current gains and play selections.  It 
certainly looks as if our "bullish" play have been on the right 
side of things, but some stocks have moved considerably higher in 
recent months and their near-term earnings are going to be 
closely scrutinized.  Many of these stocks are going to need to 
come thought with some strong earnings or at leas give some firm 
guidance to the investment public that demand is building and 
clarity is building on the horizon.

I'll be the first to admit that there is always something that is 
worrying me.  Today's move higher in the transports is a very 
good sign in my book.  This is an economically sensitive group.  
They shouldn't be acting bullish if the economy was going in the 
tank.  Today is just one day and there's a lot of work yet to be 
done.

What worries me today is what looked "so good" last week.  An 
that is energy prices.  No, two days of downside in the energy 
complex doesn't send a bull running for cover, but its one piece 
of the puzzle that I want to see firm up.

Some argue that transportation stocks can't do well when energy 
prices are rising.  I feel this argument has validity when the 
transportation sector has been at full capacity and demand begins 
to wane, yet energy prices are moving higher due to a strong 
economy and those energy/fuel costs start dragging on bottom line 
performance.  That's when energy prices have their most negative 
impact on the transportation segment.

In an "early" economic recovery, demand should be building for 
transportation needs.  Today's action in the transports is a good 
sign.  I feel there is probably quite a bit of "capacity" to fill 
for many transportation stocks if the economy is truly 
recovering.  Undoubtedly, competition is fierce for business and 
prices have been slashed in order to keep the doors open form 
many transportation stocks.  Once demand begins to firm, then 
there becomes the ability to start getting some pricing points 
back on the upside.  This is the "trickle down" economic theory 
at work.

Once business picks up in the transportation sector, then fuel 
consumption begins to pick up.  With OPEC still cutting 
production we get the supply/demand shift there and so on.

I do think that some of the past week's bullish action in the 
energy stocks is a sign that other market participants are 
thinking this way, but the recent pullback in the sector needs to 
be monitored.  In the past couple of day's, I've pretty much come 
to conclusion that OIL is the place to be in the energy sector.  
This is where supply is being limited by OPEC cuts and the most 
likely area to see demand build from any economic recovery.  I'm 
going to establish the $285 level in the CBOE Oil Index (OIX.X) 
as a level a bull does NOT want to see violated to the downside.  
I'm deriving this level by simply taking retracement from the May 
2000 highs near $352 and the September and November 2001 lows of 
$270.  19.1% retracement then falls right at $285, with 38.2% 
retracement right here at $300.  

I think energy stocks are perhaps the most perplexing yet 
interesting group in the market.  They are also one of the most 
difficult to really figure out.  Any "commodity based" sector is 
difficult to truly figure out.  Oil and natural gas commodities 
have so many uses.  Weather (hot or cold) can really impact 
demand.  Economic activity (strong or weak) can also have an 
impact.  It's tough to simply draw a line in the sand and say 
definitively what is going on.

I do believe though, that the cuts by OPEC should begin to have 
an impact on oil prices.  Regardless of weather conditions, a 
strengthening economy should see demand increasing and that 
demand should firm up oil prices if not drive them higher.  If 
this is going to be the case, then any equity bull (regardless of 
sector) will most likely want to see some of the energy groups 
find bidders soon.

Nothing happens overnight.  As I mentioned above when talking 
about TranSwitch (NASDAQ:TXCC),  I don't think the market has 
suddenly put its finger on that stock and now charts out plan for 
it to be this year's single best idea.  I just think we got the 
stock right recently and subscribers are now in a good position 
to benefit.  Heck... a couple of weeks ago, we couldn't get 
stopped out of XM Satellite Radio (XMSR) on that stocks run from 
$12 to $20.  Eventually we did and the stock is trading $15.59.

Today on CNBC I heard some comment that a viewer was blaming 
XMSR's 8.5% decline on some commentary they heard on a product 
review broadcast on CNBC.  Give me a break!  I didn't hear any 
complaint of "foul play" when the stock was vaulting from $17 to 
$20 when CNBC talked about the company and its super neat 
technology/product.

All we want to do is keep our heads and stay disciplined.  Yes, 
we have our duds in the trading account.  If you trade a lot of 
stocks you're going to have some losing trades.  The key is and 
most likely will always be to book some gains when they come.  
Keep the losses small and as you build some gains in the account 
(by closing the trade and taking a profit) you are then better 
able to give a high flyer some room to work.

Not every trade is going to be a 20% winner.  We've had our fair 
share in the past couple of months.  What I think we've done 
right is not have any 20% losers and keep our losses less than or 
equal to 10% on average.

One stock I about dropped my teeth on today was shares of Suiza 
Foods (NYSE:SZA).  Subscribers that have been with us for a while 
will remember this one from September 19th as bullish at $57.01.  
I like to look at some old favorites that we did well on in the 
past to see if they might be tradable.  That stock is trading 
$66.80!  Am I feeling like I missed the boat on this one?  Not at 
all.  We took our "pound of flesh" out of this stock and 
subscribers made good money in the trade.  At the same time, 
there are stocks that we cut for a loss that I'm darned glad we 
did.

Trader isn't a dirty word!

I don't think anyone should be ashamed to take profits or call 
themselves a trader!  I remember attending one of the 
OptionInvestor.com seminars over a year ago.  Dick Arms was 
speaking and talking about how many of his institutional clients 
had become "traders" and that the "buy and hold" strategy that 
worked so well in the late 1990's was starting to cost them 
money.  

Today on CNBC, I heard another institutional money manager saying 
that his firm had also become more open to a trading style of 
money management for stocks.

If some of the bigger guns in the market are going to be trading, 
then I think its something you and I need to be open to.  The 
market has learned in the past couple of years that "capital in 
the market is capital at risk."  As you get some profits under 
your belt (especially if you're trying to rebuild) you can then 
begin taking on more risk or giving a stock more room to work.

Don't be ashamed to lock in some gains and get the New Year off 
to a good start.  So far so good!

See you tomorrow and sleep well.

Jeff Bailey
Senior Market Technician


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

Wall Street pulls up its’ Sox.
by Russ Moore

The Semiconductor index (SOX) was on fire today (+8.3 percent), 
igniting a broad-based tech rally while taking the DOW along for 
the ride.

The NASDAQ added +3.3 percent and settled nicely above the 2000 
level. Big cap techs put in solid performances led by Intel and 
Cisco. The NDX ended with a gain of +3.5 percent. The blue-chip 
DOW managed a modest gain of +1.0 percent. Volume returned to 
more normal levels with 1.40 billion shares trading on the big 
board and 2.11 billion on the NASDAQ. Winners trounced losers by 
a 21/11 margin on the NYSE and 23/14 on the tech index.

The SOX surge came after two positive analyst comments. Eric 
Chen, of J.P.Morgan, said it would be a buyer of Intel shares 
ahead of the company’s mid-January earnings report. Merrill 
Lynch’s, Joe Osha, believes the data reported on Wednesday by the 
Semiconductor Industry Association, supports a chip recovery. 
Meanwhile, Lehman Brother’s, Edward White, believes Q1 estimates 
may be “at risk” and advised clients to sit on the sidelines 
until evidence of an imminent rebound presents itself.

In addition to the chips, hardware and networking sectors 
attracted a good deal of buying interest. Broader market action 
saw airline stocks continuing to fly high giving the XAL (airline 
index) its’ fourth consecutive winning session with a gain of 
+5.84 percent. Brokerage and cyclical issues were also on the 
rise. Biotech’s remained under pressure with BTK (biotech index) 
marking its’ third losing session in a row (-2.03 percent). 

Economic data had weekly jobless claims rising 36,000 to 447,000, 
far worse than the 386,000 forecast. More importantly, continuous 
claims rose +42,000 to 3,715,000.

The economic data of late seems to indicate the worst may be 
over. Corporate earnings, on the other hand, have yet to show 
significant signs of recovery. Is it any wonder why we continue 
to trade in a narrow range? Recent action is reminiscent of a 
heart monitor, with a series of modest peaks, and shallow 
valleys. If the markets are going to break out of this state of 
flux, it will need to see the corporate side do its’ part in the 
form of positive guidance and real earnings.


Thursday 01/03 close: 22.83


VXN
Thursday 01/03 close: 47.07


30-yr Bonds
Thursday 01/03 close: 5.54


Total Put/Call Ratio: .68


Equity Option Put/Call Ratio: .56


Index Option Put/Call Ratio: 2.21


===

NASDAQ 100 Index (NDX/QQQ)
52-Week High: 103.51
52-Week Low:   28.19
Current close: 40.50

Volume/Open Interest
Maximum calls: 40/134,529
Maximum puts : 40/ 91,260

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: 595.13

Volume/Open Interest
Maximum calls: 590/4,706
Maximum puts : 520/4,799
Moving Averages
 10 DMA  588
 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: 1165.27

Volume / Open Interest
Maximum calls: 1150/40,789
Maximum puts : 1150/35,700
Moving Averages
 10 DMA 1151
 20 DMA 1147
 50 DMA 1130
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: 10,172.14

Volume / Open Interest
Maximum Calls: 100/14,199
Maximum Puts   100/29,401

Moving Averages:
 10 DMA 10,074
 20 DMA 10,009
 50 DMA  9,783
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: 559.60

Volume / Open Interest
Maximum Calls: 660/  368
Maximum Puts:  580/2,281

Moving Averages
 10 DMA 581
 20 DMA 583
 50 DMA 578
200 DMA 539

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: 590.62

Volume / Open Interest
Maximum Calls: 440/1,577
Maximum Puts:  500/2,879

Moving Averages
 10 DMA 532
 20 DMA 549
 50 DMA 521
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: 378.90

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)
=========================
(new high risk/high reward play)

ADC Telecommunications - ADCT - cls: 5.06 chg: +0.38 stop: 4.54

Company Description:
ADC is The Broadband Company(TM). ADC tailors high-quality, 
custom solutions of network equipment, fiber optics, software and 
systems integration services that enable communications service 
providers to deliver high-speed Internet, data, video and voice 
services to consumers and businesses worldwide. ADC has sales 
into nearly 100 countries. (source: Company Press Release)

Why We Like It:
Are telecom stocks back from the dead?  No one knows if 2002 will 
be any better for the tarnished sector but it can't be much worse 
than 2001.  Looks can be deceiving but it does appear that many 
of the equities in this sector have put in a bottom.  The last 
few sessions have been positive for many telecom stocks and ADCT 
has decided to join the party.  We like the bullish pattern it 
has been building with higher lows growing from its September 
bottom.  On a more short-term basis, it looks like ADCT has 
bottomed or found decent support at the $4.50 level if you look 
at the last several sessions.  Today's big move sent shares 
soaring through resistance at $4.75 and $5.00.  The MACD is about 
to turn positive so we may be able to catch three or four days in 
the next leg up.  We're going to set our initial stop at 
Wednesday's low of $4.54.  If all goes according to plan we'll 
try and exit at $5.95, a nickel below the 200-dma at $6.00.  
However, if the opportunity presents itself, exiting at $5.75 
would be a great move as well.

Picked on January 3rd at $ 5.06
Change since picked:      +0.00
Earnings Date          11/28/01 (confirmed)







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Do not duplicate or redistribute in any form.

PremierInvestor.net Newsletter                  Thursday 01-03-2002
                                                     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
=================================================================
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In section two:

Net Bulls
  New Bullish Play:      NOK
  Bullish Play Updates:  NEWP, SFA

Stock Bottom / Active Trader
  New Bullish Play:     NCOG
  Bullish Play Updates: BGP, SEIC, UVN

High Risk / High Reward
  New Bullish Play:     ADCT
  Bullish Play Updates: INKT, TXCC

Split Trader
  - none -

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) / Tech Stock section
==================================================================

===========
NB New Play
===========

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

Nokia Corp - NOK - close: 26.90 change: +1.33 stop: 24.39

Company Description:
Nokia is the world leader in mobile communications. Backed by its 
experience, innovation, user-friendliness and secure solutions, 
the company has become the leading supplier of mobile phones and 
a leading supplier of mobile, fixed and IP networks. By adding 
mobility to the Internet Nokia creates new opportunities for 
companies and further enriches the daily lives of people. 
(source: company press release)

Why We Like It:
With investors looking to tech stocks for early gains in the new 
year, it is interesting to see telecom stocks as big gainers.  
Also interesting was the big move in wireless telecom players 
like NOK.  NOK has been consolidating under resistance at $26 in 
a long, slow and ugly bullish wedge since mid-November.  Now that 
it is finally above its resistance it might have a chance to do 
something.  The big volume was a nice confirmation of the move 
and the MACD just produced a bullish crossover.  It does have 
potential resistance at $28.50 but the point-and-figure chart 
shows it cleanly above the descending bearish line of resistance 
so we're looking for a multi-day move.  We'll start the play with 
a stop just under Monday's low.  A pull back and bounce at $26 
might be a good entry point if you don't like the stock here.  We 
don't see an earnings date for January yet but we'll expect an 
announcement in the next couple of weeks.

Picked on January 3rd at $26.90
Change since picked:      +0.00
Earnings Date          10/19/01 (confirmed)






===============
NB Play Updates
===============

  --------------------
  Bullish Play Updates
  --------------------

Newport Corp - NEWP - close: 23.35 change: +3.10 stop: 22.34 *new*

Our play-of-the-day for Thursday certainly paid off.  Optimistic 
comments by analysts this morning fueled a big move in tech 
stocks and NEWP was not left behind.  On the contrary, shares 
opened at $20.60 this morning and didn't look back.  This big 
move produced the technical breakout point-and-figure chart 
watchers may have been looking for.  The volume was huge with 
2.3M shares trading versus the average of 879K.  We debated on 
whether it would be wiser to close the play with the 15% move 
today or see if shares can keep the rally going.  We opted for a 
much higher stop and an exit price just under the 200-dma.  
Readers can double check extra comments made by Bailey in 
tonight's wrap as well.  Our new stop will be $22.34 and should 
protect a move of $2.09 or 10%.  If NEWP trades to $24.25, about 
a nickel below its 200-dma, we want to close the play for a 
profit.  In the news today, NEWP put out a release stating their 
CEO and CFO will be presenting at the Fourth Annual Needham & Co. 
Growth Conference in New York on Jan. 8th.  If we're still in the 
play by then, any good news could be an extra boost for the share 
price.  

Picked on January 2nd at $20.25
Change since picked:      +3.10
Earnings Date          10/17/01 (confirmed)




---

Scientific Atlanta - SFA - cls: 26.31 chg: +1.25 stop: 23.74*new*

The rising tech tide also lifted shares of SFA in Thursday's 
rally.  The stock had been languishing near its 50-dma under 
resistance at $25.  The 5% move today helped push it over both 
the $25 and the $26 levels.  The MACD is about to produce a 
bullish crossover and our short-term indicator of the 5-dma 
versus the 15-dma just produced a bullish crossover.  We wouldn't 
be surprised to see shares dip back to $25.50 or $25.00 but wait 
for the bounce if it does.  Closing near the high of the day is 
bullish for Friday morning.  We are raising our stop a buck to 
$23.74.  With the play currently up about six percent, more 
conservative traders might want to put their stop at breakeven 
($24.73).  Look for resistance at $27.50, $28 and $30.  Any of 
these levels may qualify as exit points depending on your game 
plan.  

Picked on December 28th at $24.73
Change since picked:        +1.58
Earnings Date            01/17/02 (unconfirmed)






==================================================================
Stock Bottom / Active Trader (AT) Non-tech stock section
==================================================================

============
AT New Plays
============

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

NCO Group, Inc. - NCOG - close: 24.17 change: +1.10 stop: 22.19

Company Description:
NCO Portfolio Management, Inc. is a leading purchaser and manager 
of delinquent accounts receivable. (Source: company press 
release)

Why We Like It:
With the economy in a recession, folks at NCO are probably doing 
a pretty good business right now.  The stock had run into a brick 
wall with resistance at $18 in late November and early December 
but then something or someone "happened" to NCOG.  We couldn't 
find any news but the stock broke out on big volume.  More 
interesting was how the gains and the volume kept coming for the 
next several sessions.  Shares eventually broke above its 200-dma 
but investors did some profit taking as it approached the $25 
level.  We like the orderly pull back to the $22 level and the 
two-day "bounce" at this level looks like buyers were waiting for 
the dip.  Today's move back over the 200-dma and over $24 looks 
like a possible entry point.  Aggressive traders can look for 
dips to $23 while more conservative traders may want to wait for 
it to close over $25.  We think shares might be able to trade to 
$29 but expect resistance at $27.50 (and $25).  Enter any plays 
carefully.  We're going to start the play with a stop under 
yesterday's low.  We don't expect earnings until February but can 
not find any date yet.

Picked on January 3rd at $24.17 
Change since picked:      +0.00
Earnings Date          11/06/01 (confirmed)






===============
AT Play Updates
===============

  --------------------
  Bullish Play Updates
  --------------------

Borders Group Inc - BGP - cls: 20.35 chg: +0.46 stop: 19.19 *new*

Shares of BGP traded through our trigger point of $20.05 on 
Monday but gave it all back the same day as many stocks fell to 
year-end profit taking.  Not the most promising opening act for 
our long play that took a turn for the worse in Wednesday's 
trading.  Early morning weakness in the broader markets on Jan. 
3rd combined with more profit taking in the retail group sent 
shares of BGP below its 200-dma before bouncing near its 15-dma 
at the $19.20 level.  Our stop was $18.99.  Fortunately, the late 
day rebound brought shares back above its 200-dma.  The 
optimistic market that lifted several sectors higher on Thursday 
forgot the retail index, which dropped a couple of points, but 
BGP rallied despite the lack of strength in the group.  This is 
the strongest close over the $20 level since early October and 
may be the confirmation many bulls were looking for.  We would 
still be somewhat cautious and consider new plays only with 
shares above $20.  We are raising our stop just below yesterday's 
low ($19.19).  More conservative traders might want to use 
something tighter.

Picked on December 27th at $20.05 
Change since picked:        +0.30
Earnings Date            03/14/02 (unconfirmed)




---

SEI Investments - SEIC - cls: 44.65 chg: +0.20 stop: 42.99 

The same broad market weakness that affected the DJIA and the 
Nasdaq on Wednesday also hit the brokerage/financial group.  
Shares of SEIC gapped down and traded to $43.01, two cents above 
our stop.  Shares did close off its lows but not with much 
conviction.  Today was a bit different.  Cautious comments about 
Merrill Lynch did not slow down the rally in the XBD.X 
broker/dealer index but investors were still slow to move into 
SEIC.  Again, shares traded toward the $43 mark but this time the 
afternoon rally had a bit more punch for SEIC.  Despite the 
rebound this stock seems to have new trouble with resistance at 
$45.  We would be cautious starting new positions at this time and 
look for new confirmation that the up trend is still intact.

Picked on December 15th at $43.41
Change since picked:        +1.24
Earnings Date               10/16 (unconfirmed)




---

Univision - UVN - close: 40.21 change: -0.69 stop: 37.99

All the excitement about tech stocks seem to have stolen any 
interest in our Spanish language media play.  Shares have bounced 
off the $40 level twice in the past two days.  As long as the 
stock remains above $40 bullish traders should be okay.  
Aggressive investors might consider a bounce at $39 as a possible 
entry but we would turn cautionary if this occurred.  

Picked on December 28th at $40.89 
Change since picked:        -0.68
Earnings Date            11/06/01 (confirmed)





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

  --------------------
  Closed Bullish Play 
  --------------------

Barr Labs - BRL - close: 78.00 change: -1.00 stop: 76.99 

The last few sessions have not been kind to drug or biotech 
stocks.  Add a couple of downgrades to other big name stocks in 
the two groups and we're not surprised to see BRL reverse its 
breakout over $80 and lose its 10-dma.  The MACD is rolling over 
and we're choosing to close the play now for a small loss than 
get stopped out in the next day or two.  Shares should still find 
support at $75 and again at $70.

Picked on December 24th at $79.05 
Gain since picked:          -1.05
Earnings Date               10/23 (confirmed)






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

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

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

ADC Telecommunications - ADCT - cls: 5.06 chg: +0.38 stop: 4.54

Company Description:
ADC is The Broadband Company(TM). ADC tailors high-quality, 
custom solutions of network equipment, fiber optics, software and 
systems integration services that enable communications service 
providers to deliver high-speed Internet, data, video and voice 
services to consumers and businesses worldwide. ADC has sales 
into nearly 100 countries. (source: Company Press Release)

Why We Like It:
Are telecom stocks back from the dead?  No one knows if 2002 will 
be any better for the tarnished sector but it can't be much worse 
than 2001.  Looks can be deceiving but it does appear that many 
of the equities in this sector have put in a bottom.  The last 
few sessions have been positive for many telecom stocks and ADCT 
has decided to join the party.  We like the bullish pattern it 
has been building with higher lows growing from its September 
bottom.  On a more short-term basis, it looks like ADCT has 
bottomed or found decent support at the $4.50 level if you look 
at the last several sessions.  Today's big move sent shares 
soaring through resistance at $4.75 and $5.00.  The MACD is about 
to turn positive so we may be able to catch three or four days in 
the next leg up.  We're going to set our initial stop at 
Wednesday's low of $4.54.  If all goes according to plan we'll 
try and exit at $5.95, a nickel below the 200-dma at $6.00.  
However, if the opportunity presents itself, exiting at $5.75 
would be a great move as well.

Picked on January 3rd at $ 5.06
Change since picked:      +0.00
Earnings Date          11/28/01 (confirmed)






===============
HR Play Updates
===============

  --------------------
  Bullish Play Updates
  --------------------

Inktomi Corp - INKT - close: 7.29 change: +0.66 stop: 6.94*new*

At least one of our bullish Internet stock plays is panning out.  
INKT enjoyed a 9.95% gain today with the several tech sectors 
scoring big moves.  The close at $7.29 is encouraging, as $7.25 
could have been overhead resistance (look at a 30-minute chart).  
Volume was decent and shares closed near their high for the day.  
We're still gunning for an exit near $8.00 but are going to try 
and let the stock run.  In the mean time we'll raise our stop to 
$6.94.  This way we can try and protect some of these gains.  
Traders should be cautious on new entries but a bounce at $7.00 
might be doable if you have a tight stop to limit your risk.  
Currently, the newsletter is up over 11% in INKT.

Picked on December 28th at $ 6.55
Change since picked:        +0.74
Earnings Date            10/18/01 (confirmed)




---

TranSwitch Corp - TXCC - cls: 5.50 chg: +0.50 stop: 5.15 *new*

Our big winner for the new year is currently TXCC.  The stock is 
up 22% in two days.  Today shares gapped up above their 100-dma 
before pulling back just a bit to tag it and they were off and 
running.  The question bulls should be asking now, is can TXCC 
conquer resistance at $5.60 like it did in early December?  The 
$5.50 to $5.60 area has stopped TXCC twice in mid-October and 
once in mid-November.  If volume is any indicator then the answer 
might be yes.  Volume has been rising the last two days as the 
stock climbed higher with Thursday's volume double the normal at 
more than 6M.  We are going to raise our stop and create an exit 
point.  The new stop will be today's low at $5.15.  Our exit 
point will be $6.50.  If TXCC trades there intraday we'll 
hypothetically close the play for a profit.  Check out tonight's 
wrap for Bailey's comments on TXCC.

Picked on December 31st at $ 4.50
Change since picked:        +1.00
Earnings Date            01/17/02 (unconfirmed)







==================
  Trading Ideas
==================

This section contains stocks that meet criteria which may make
them of interest to long and short side traders.  These are not
recommendations, nor have they been reviewed by PremierInvestor
editors for investment potential.  However, each of them has
technical and fundamental characteristics that make them worthy
of further review by traders and investors looking for fresh ideas.
New stocks will appear daily following the market close.

--------------------------------- 
Value Plays With Bullish Signals 
--------------------------------- 
Ticker  Company Name               Close     Change 

HBC     Hsbc Holdings              60.67     +0.85
AXA     Axa Ads                    22.12     +0.69
TMX     Telefonos De Mexico        36.73     +1.00
NCR     Ncr Corp                   38.98     +0.73
ROK     Rockwell Intl. Corp        18.64     +0.71

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

TSM     Taiwan Semiconductor       18.58     +1.10
ORCL    Oracle Corp                15.29     +1.31
EMC     Emc Corp                   16.59     +1.79
SCH     Charles Schwab             16.85     +1.29
AMD     Advanced Micro Devices     19.37     +2.98
BMC     Bmc Software Inc           18.10     +1.40

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

TXN     Texas Instruments Inc      30.70     +1.88
INTC    Intel Corp                 35.52     +2.52
NOK     Nokia Corp                 26.90     +1.33
WAG     Walgreens Co               34.41     +1.33
SNE     Sony Corp                  47.25     +1.30
PHG     Koninlijke Philips         31.36     +1.31

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

SGP     Schering-Plough Corp       34.63     -1.37
TYC     Tyco Intl. Ltd             54.98     -2.27
AMGN    Amgen Inc                  54.34     -2.06
EDS     Electronic Data Systems    64.45     -2.80
SLM     Usa Education Inc          80.00     -2.29
PGR     Progressive Corp          145.56     -2.45

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

ELN     Elan Corp                  42.40     -1.95
CNI     Canadian Natl. Railway     47.69     -0.22
BVF     Biovail Corp               54.20     -1.05
ABI     Applied Biosystems Corp    36.06     -1.94
FDO     Family Dollar Stores Inc   29.14     -0.47
SWK     The Stanley Works          44.97     -0.99




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

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

*****************************************************************
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Do not duplicate or redistribute in any form.


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