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Daily Newsletter, Wednesday, 01/09/2002

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PremierInvestor.net Newsletter              Wednesday 01-09-2002
                                                  section 1 of 2
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In section one:

Market Wrap:      Jaws and stocks drop in last hour of trading
Watch List:       SYMC, IRM, IFIN, NATI, MENT, GNSS, BBI
Market Sentiment: Rumors on rumors.
Play-of-the-Day:  Up In Smoke

-----------------------------------------------------------------
U.S. Market Numbers
-----------------------------------------------------------------
MARKET WRAP  (view in courier font for table alignment)
-----------------------------------------------------------------
      01-09-2002          High     Low     Volume Advance/Decline
DJIA    10094.09 - 56.46 10270.88 10069.45 1.45 bln   1527/1599	
NASDAQ   2044.89 - 10.85  2098.88  2034.09 2.28 bln   1693/1946
S&P 100   589.62 -  2.88   600.02   587.80   Totals   3220/3545
S&P 500  1155.14 -  5.57  1174.26  1151.89
RUS 2000  494.74 -  3.16   503.08   494.74
DJ TRANS 2775.15 - 48.19  2826.65  2769.27
VIX        23.29 +  0.79    23.68    22.03
VXN        48.28 +  0.87    48.71    45.98
TRIN        1.31
Put/Call    0.55
-----------------------------------------------------------------

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

Jaws and stocks drop in last hour of trading

Nobody could have forecasted today's last hour of selling as 
stocks had a major reversal of fortunes in the final 60-minutes 
of trading.  The "explanations" given were lack of liquidity, 
rumor that Moody's plans to downgrade three major Japanese banks 
as early as tonight, somewhat-cautious comments by a Fed Governor 
this afternoon suggesting that the markets are pricing in more of 
a recovery than the economy is showing and an outlandish rumor 
that the U.S. had begun bombing Iraq (this was immediately 
mentioned on many newswires and quickly squashed, but added to 
some uncertainty when stocks turned red).  All of the 
aforementioned may have played a part.

The only thing I saw that "worried" me today was the S&P 500 
Index's inability to puncture that $1,175 level we've talked 
about.  I was watching that level rather closely today and I must 
admit, I was surprised/perplexed that this broader market average 
was not able to get above that level of resistance.  It did trade 
as high as $1,174.26, but when she started slipping back below 
the $1,170 level, that's when I started making some observation 
in the OptionInvestor.com market monitor at around 02:23 PM EST.  
By session's end, the S&P 500 finished down 5.5 points at 1,155.

S&P 500 Index Chart - Daily Interval




I've shown a couple of retracement brackets on the S&P 500 Index 
where the 1,175 level sure seems to show up as a major level of 
resistance.  This "commonality" that we find is once again 
evident in retracement from the September/October 1998 lows 
(which many called the bottom to the 1998 decline) to the all-
time highs (which many now call the top) in March of 2000.  While 
there was quite a bit of bullishness in many technology sectors 
for the bulk of the session, the S&P 500 still has not been able 
to close above this mystical yet prevalent 1,175 level.  Until it 
can, bulls need to be realistic and disciplined with their 
trading.  When you get a nice profit going (being realistic of 7% 
or more depending on volatility of the stock) bulls need to be 
raising stops.  We NEVER know what is going to take place and 
what type of "reason" the MARKET is going to use to buy or sell.

Before we get inundated with bears saying "I told you so," I will 
say that I've gotten numerous e-mails from traders/investors that 
are holding some stock short that have moved significantly 
against them.  Some are experienced traders that have traded the 
markets for quite some time, but just didn't think the stock 
could move higher and break to new highs.

Gold stocks were winners, now look for this

One of the groups of stocks we felt might make a move today were 
the gold and precious metals stocks.  This was the sector winner 
today as the PHLX Gold/Silver Index (XAU.X) jumped 3.93% and was 
the only sector that managed to hold the bulk of its session's 
gains.  This morning's consumer credit number sure didn't hurt as 
that number showed Americans piled on the debt in November at a 
record pace.

In last night's wrap, we talked in depth about this sector and 
the underlying commodity as it relates to the February gold 
futures chart.  We thought a move above the $282.10 level in the 
February Gold futures (gc02g) might spark a rally and today's 
move above that $282.10 level and close of $284.20 did just that.  
The session high for this contract was $285 and matches a point 
of resistance dating back to mid-October.

February Gold Futures Contract - Daily Interval




Tonight I'm placing a retracement on the February Gold Futures 
chart to give us some levels to monitor and help lay out a 
scenario.  I'm using conventional retracement from the contract 
high and contract lows as marked on the chart.  I'm not trying to 
make futures traders out of you, but it is important to 
understand the commodity if you're trying to trade the gold 
stocks.  As you can see, the Gold futures shot higher today, out 
of a tight range of consolidation.  Almost like a keg of powder 
that exploded.

In last night's commentary I mentioned the possibility of a 
"short-squeeze" in gold  This thought came from the spike in 
volume of 1,416 contracts (red A) from 12/17/01 ($278.90 - 
$277.00) in a very tight range.  Just like you would do if you 
were trying to "count cards" in a game of cards, you get the 
feeling that that volume spike was a major bet by two market 
participants (one buyer, one seller) and today's spike in volume 
hints the squeeze in underway or that demand is now in control.

Today's rally to the $285 level sure gives hint that this number 
wasn't plucked out of thin air.  Our retracement bracket sheds 
some light on that level.  This also correlated with the mid-
October action (red B) when the commodity began falling sharply 
about a month after the terrorist attacks here in the U.S.  
Tomorrow, an equity in bull in some gold stocks wants to see this 
futures contract shoot higher still.

Should the gold futures contract shoot to the $291 level (80.9% 
retracement) then that might well be a near-term target for bulls 
to lock in some gains on stock positions.

Bonds didn't budge

As mentioned earlier in the wrap, there were several news 
comments of why stocks faltered today.  While it would be nice to 
know for certain if it was worries over a Moody's potential 
downgrade on Japanese banks (something I think the MARKET may 
have factored in) or yesterday's news out of Argentina (something 
I think the MARKET may have factored in) the bond market action 
today showed little "fear" of currency or debt crisis.

But as you and I know, each day is a new day and we must monitor 
bonds closely.  For now, the move higher in gold may have simply 
been a true "short-squeeze" and just a near-term supply/demand 
issue in the market (which can be quickly resolved and new 
equilibrium found) or it could be a precursor to some debt, 
banking or even consumer credit concerns.  The way we will most 
likely get hint of this is if we were to see a rush back to 
safety in bonds.

Why are bonds so important again?  Remember to ask yourself why 
gold moves higher.  Two reasons we've discussed before.  Gold can 
move higher due to inflation concerns or worry over currency 
problems.  With some signs of economic turnaround you've got 
potential inflation.  With an aggressive Fed pumping liquidity 
into the system you've got potential concerns for inflation.  On 
the currency side you've got Argentina getting ready to devalue.  
We may also have Moody's getting ready to downgrade some Japan 
bank debt.

What we get from the bond market is the potential ability to help 
differentiate what gold won't tell us.  You see, in the above 
paragraph, we can make a case for gold to move higher under 
either scenario, but with bonds we may well be able to 
differentiate.  I believe that bond YIELDS would go lower if the 
market "fears" some type of Japan or Argentina major problem 
(this hasn't happened yet).  But if the move in gold is due to 
potential inflation concerns, then we should see selling in bonds 
shouldn't we?

Once again.... U.S. Treasury bonds did nothing today, but trade a 
very tight range.  Heck, even yesterday with the Argentina news 
and this morning with the higher than expected consumer credit 
numbers, bonds for the most part just sat still.

Tomorrow will be interesting indeed and we might get an answer to 
today's late sell-off in stocks.

Right now, I truly feel that there was just a "stoppage" of 
buying for stocks based on all the "rumors" that were hitting the 
market.  When the S&P 500 wasn't making headway at 1,175 and 
started drifting back lower, I even heard there was a short in 
the S&P futures market.  With all the rumors floating around, I 
don't blame any bull that was somewhat uncertain from simply 
moving to the sidelines, snugging up some stops and gathering 
more information.

What to look for tomorrow

I want to have a trade ready to go that is bearish for tomorrow.  
Our play list has been bull, bull, bull lately and some 
subscribers may need this one.  I want to have a short/put ready 
for the AMEX SPDRS (AMEX:SPY) tomorrow morning.

Not every subscriber can watch gold and bonds, but I will do my 
best to update everyone at the 09:00 AM EST update on what is 
taking place in the futures market.

If we were to see gold going higher and bond YIELDS falling, we 
will have an idea that the MARKET is defensive.  This type of 
combination would come on some type of currency or debt concerns.  
This is DIVERGENCE that I consider negative for the broader 
market.  To me, the only reason this type of action would take 
place is if there is meaningful concern toward Argentina, Japan 
and consumer credit levels.  The SPDRS (AMEX:SPY) mimics the S&P 
500 Index (SPX.X).

SPDRS (AMEX:SPY) Chart - Daily Interval




As you can see, the SPDRS look almost identical to the S&P 500 
Index.  If you'd like more information on the SPDRS and how they 
function (always know what type of security you're trading and 
how it functions) you can visit www.amex.com and then click the 
SPDR Trust Series 1 link on the page.  Hey!  General Electric 
(NYSE:GE) was the most heavily weighted stock as of 09/28/01!

Pocket of weakness

One sector that did show marked weakness today was the 
telecommunication sector.  I have to give credit to James Brown 
and his pick last night on the short-side in shares of Metro One 
Telecommunications (NASDAQ:MTON).  As it is with any trade, 
success/failure can only be measured once the trade is closed, 
but today's action in the broader telecom group did look bearish.  
As of tonight's close, this stock is sitting right on some 
support levels.  One comes from the point and figure chart with 
the bullish support trend at $26.  This is right at a level where 
the stock shot higher in late October.  FOLLOW THE STOP as 
outlined by James in the play.  The stock is also sitting right 
near a level of retracement support at $26.43 and may be very 
close to a level where shorts are looking to cover.  Keep a tight 
stop on this one.  If she breaks the $26 level, we could see a 
test of the recent lows near $22-$23.

Today, JP Morgan downgraded Nokia (NYSE:NOK), Ericsson 
(NASDAQ:ERICY) and Alcatel (NYSE:ALA) on concerns of slowing 
demand in Europe.  All three of the stocks traded lower today and 
help fuel broader telecom selling.  JP Morgan isn't alone in 
their "wireless" negativity as today's downgrade came on the 
heels of Tuesday's group comments by Merrill Lynch when the firm 
reiterated at "neutral" rating on Nokia, saying its shares and 
those of rival Ericsson had run up nearly 100% since their 
September lows and their research indicated that handset weakness 
would remain weak through the first quarter of 2002.

Merrill also said it has heard from various sources that wireless 
handset component suppliers were saying Q1 bookings have been 
generally weak and that some component prices were falling by 15-
20%, which could help offset lower demand for handsets.

Merrill felt firmer data will be available when Motorola 
(NYSE:MOT) reports earnings on January 22nd, followed by Nokia on 
the 24th and Ericsson on the 25th.

As we have all learned though.  No matter what some analysts say 
(me included) it is up to us to manage the risk/reward in our 
accounts.  We have understood for sometime that the MARKET 
usually has things figure out ahead of time and most of the bad 
news comes out at the bottom, while all the good news comes out 
at the top.

Tomorrow morning I will be watching bond YIELDS and gold early 
on.  I do think that today's late sell off is once again 
concerning.  As ridiculous as some rumors were, the MARKET did 
seem to pay attention to them (I'm talking about the Iraq/war 
rumor).

With gold shooting higher, it may well be that it was just a bit 
of a short squeeze, but broader market equity bulls DO NOT want 
to see a higher gold rice, couple with the buying of bonds.  As 
it relates to economics, this is DIVERGENCE and most likely would 
indicate the MARKET is concerned about some type of currency or 
debt issue (Argentina/Japan).  Since we live in what is now known 
as a "global economy" any problems related to trading partners or 
could impact regions of the globe must be considered.  I'll be 
using the gold and bond market to get a grasp of this and monitor 
it closely.

You don't have to have a doctorate in economics to necessarily 
understand how to look at some charts like we do, make some 
observations and build some scenarios.

Right now, we need an action plan in place to protect and 
potentially benefit from what takes place.  Since the 
PremierInvestor.net profiled play section is weighted to the 
bullish side, we'll all be fine if we have firm stops in place 
and open to some bearish ideas if we see gold prices head higher 
and we were to see buying in bonds.

If neither happens, then I feel the broader market averages will 
do fine.  We'll take one day at a time as we always do.  It's 
still way too soon to think the economy is in overdrive and on a 
quick path to recovery.  There's a lot of things going on in the 
world and not all of it is good.

See you tomorrow!

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.

----------

Symantec Corp - SYMC - close: 73.25 change: +3.26 

WHAT TO WATCH: Shares of SYMC continue to be a leader in the 
software group and today's move was complimented with stronger 
than average volume.  The stock had been battling with overhead 
resistance at $70 for most of December and Wednesday's move has 
helped the MACD produce a new bullish crossover.  There is 
resistance at the hold high from May at $73.41 but we think the 
stock will be able to conquer it.  One way to play the breakout 
is look for a move or a bounce back near $70 to $71.  A pull back 
after the break seems to be common these days.  Two dates to 
watch out for are earnings on January 16th and its 2:1 split on 
January 31st.  




---

Iron Mountain - IRM - close: 31.93 change: +1.98

WHAT TO WATCH: Another big mover today was IRM.  Shares powered 
higher all day and closed near their highs.  This looks like a 
new 52 week high for the stock price.  Again, we would not be 
surprised to see shares pull back after a big move and we would 
target $30.50 as the bounce area.  Earnings are expected in 
February.




---

Investors Financial Services - IFIN - close: 72.39 change: +1.33

WHAT TO WATCH: IFIN doesn't appear to be trading in sync with any 
of the major market or sector indices.  I'm sure that's okay for 
the bulls as the stock continues to march higher to the beat of 
its own drum.  December saw a big pull back from the November 
rally but buyers were waiting at the 50-dma and they stepped in 
again over a week ago at the 200-dma.  Now shares have surpassed 
the December high and look as strong as ever with increasing 
volume and a rising MACD.  IFIN is short-term overbought but the 
momentum might be able to carry it through into its earnings 
report on January 22nd.  




---

National Instruments Corp - NATI - close: 41.84 change: +1.43

WHAT TO WATCH: Shares of this testing and measurement equipment 
maker have produced a beautiful breakout over six week old 
resistance at $40.  Volume on the move was strong which should 
encourage the bulls.  Look for earnings near January 23rd, 2002.




---

Mentor Graphics Corp - MENT - close: 26.85 change: +1.74

WHAT TO WATCH: A positive earnings "warning" that results will be 
better than expected have boosted shares of MENT through 
resistance at $26.  We would look for a pull back to $26 as a 
potential entry point but don't forget to use a stop.  There is 
tough resistance between $29 and $29.50 overhead.  Wall Street 
will be looking for earnings on January 24th, 2002.




---

Genesis Microchip Inc. - GNSS - close: 72.51 change: +2.96

WHAT TO WATCH: The semiconductor index (SOX.X) may be having 
trouble with overhead resistance but shares of GNSS are not going 
to wait on it.  The chip supplier gapped up above tough 
resistance at $70 and traded near $75 before late afternoon 
market weakness brought it back down.  Again, we would look for a 
pull back towards the $70.00 to $70.50 level as a possible entry 
point.  The SOX looks vulnerable under the 600 level, thus we 
would definitely use a stop on GNSS.  Earnings should be on 
January 17th, 2002 for the company.




---

Blockbuster Inc - BBI - close: 21.45 change: -2.50

WHAT TO WATCH: This one is a breakout to the downside.  Shares of 
BBI collapsed today on news that Radioshack (NYSE:RSH) would pull 
out of the two companies' plans to introduce Radioshack stores in 
all the BBI locations.  RSH had planned on investing hundreds of 
millions in the venture but pulled out on concerns that they 
would not achieve a strong enough return on investment.  BBI fell 
to its 200-dma before bouncing higher.  It is unclear whether 
this is a knee jerk reaction and BBI may bounce (potentially to 
$23.50) or if the stock will continue to fall.  Look for the 200-
dma to act as support and a break below may be a shorting 
opportunity.






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

Rumors on rumors.
by Russ Moore

Talk of a possible attack on Iraq, a U.S refueling plane crashing 
in Pakistan, and Dallas Fed president Robert McTeer’s comment 
that the central bank would have liked to seen more impact from 
the rate cuts were all given as possible reasons for today’s late 
day collapse.

The DOW slipped -0.6 percent while the NASDAQ dropped -0.5 
percent and the NDX -0.6 percent. Volume was up noticeably as 
1.44 billion shares were traded on the big board and 2.29 billion 
on the NASDAQ. Market breadth had losers squeaking past winners 
by a 16/15 margin on the NYSE and 19/17 on the tech index.

Gold, oil service, drug and paper sectors were all in the green. 
Software was the only bright light on the tech side thanks to an 
announcement from SAP that fourth quarter sales were brisker than 
expected and, an upgrade on Oracle.

Today’s session was void of economic data however, tomorrow’s 
initial jobless claims could spark a move either way. 

Rumors aside, today’s market reversal may simply come down to a 
market that’s running out of gas. We’ve witnessed massive gains 
over the last couple of months and it may be time for a sizeable 
breather.


Wednesday 01/09 close: 23.29


VXN
Wednesday 01/09 close: 48.28


30-yr Bonds
Wednesday 01/09 close: 5.50


Total Put/Call Ratio: .78


Equity Option Put/Call Ratio: .69


Index Option Put/Call Ratio: 1.94


===

NASDAQ 100 Index (NDX/QQQ)
52-Week High: 103.51
52-Week Low:   28.19
Current close: 41.11

Volume/Open Interest
Maximum calls: 40/126,971
Maximum puts : 40/102,629

Moving Averages
 10 DMA 40
 20 DMA 40
 50 DMA 39
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: 589.62

Volume/Open Interest
Maximum calls: 590/4,817
Maximum puts : 580/5,164
Moving Averages
 10 DMA  591
 20 DMA  586
 50 DMA  582
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: 1155.14

Volume / Open Interest
Maximum calls: 1150/40,198
Maximum puts : 1150/36,854
Moving Averages
 10 DMA 1158
 20 DMA 1148
 50 DMA 1135
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: 10,094.09

Volume / Open Interest
Maximum Calls: 100/13,776
Maximum Puts   100/30,625

Moving Averages:
 10 DMA 10,132
 20 DMA 10,035
 50 DMA  9,843
200 DMA 10,096

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: 555.72

Volume / Open Interest
Maximum Calls: 660/  354
Maximum Puts:  580/1,150

Moving Averages
 10 DMA 573
 20 DMA 575
 50 DMA 580
200 DMA 540

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: 584.27

Volume / Open Interest
Maximum Calls: 440/ 847
Maximum Puts:  470/2,084

Moving Averages
 10 DMA 558
 20 DMA 551
 50 DMA 531
200 DMA 555

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: 374.59

Volume / Open Interest
Maximum Calls: 400/525
Maximum Puts:  360/835

Moving Averages
 10 DMA 379
 20 DMA 380
 50 DMA 388
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, 02/04. 
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 
12/18/01     391,995   456,968   (64,973)    4.3%
12/25/01     412,581   471,239   (58,658)   (9.7%)
01/01/02     338,288   407,107   (68,729)   17.1% 

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
12/18/01       158,300    80,507    77,793     8.4%
12/05/01       152,521    79,444    73,077    (6.1%)
01/01/02       127,419    55,576    71,843    (1.6%)

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 
12/18/01      55,276    58,433    (3,157)  (46.7%)
12/25/01      55,250    47,476     7,774   
01/01/02      29,801    37,497    (7,696)

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
12/18/01       17,649    18,626     (977)   
12/25/01       15,810    25,687   (9,877)
01/01/02       10,649     5,913    4,736   

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 
12/18/01      21,919    13,810    8,109    (23.2%)
12/25/01      15,492     7,335    8,157       .6%
01/01/02      15,820     7,553    8,267     1.3%

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
12/18/01       6,790    10,943    (4,153)    (25.8%)
12/25/01       4,293     9,086    (4,793)     15.4%
01/01/02       3,368     8,668    (5,300)     10.6%
 
Most bearish reading of the year:  (7,572) - 5/08/01
Most bullish reading of the year:   1,909  - 1/16/01


                    Small Specs               Commercials
S&P 500         (Current)  (Previous)     (Current) (Previous)
Open Interest
Net Value        +71,843     +73,077        -68,729     -58,658

Total Open
Interest %       (+39.26%)  (+31.50%)      (-9.22%)   (-6.64%)
                 net-long   net-long       net-short  net-short


                     Small Specs             Commercials
DJIA futures     (Current) (Previous)    (Current) (Previous)
Open Interest
Net Value          -5,300     -4,793          +8,267    8,157
Total Open
interest %       (-44.03%)    (-35.82%)      (+35.37%)  (+35.73)
                 net-short   net-short     net-long    net-long


                     Small Spec              Commercials
NASDAQ 100      (Current) (Previous)    (Current) (Previous)
Open Interest
Net Value         +4,736      -9877         -7,696    +7,774

Total Open
Interest %        (+28.60%)   (-23.80%)     (-11.44%) (+7.49%)
                 net-short   net-short      net-short  net-long


What COT Data Tells Us
----------------------
Indices:.Interesting changes this week as the Commercials 
increased their net-shorts on the S&P 500 (bearish) while the 
Small Specs added to their net-long percentage. Increasing 
divergence is what we’re looking for and we’ll be watching this 
one closely over the coming weeks. Elsewhere, Commercials did a 
flip-flop on the NASDAQ 100 with a change to net-short contracts. 
Once again we see increasing divergence between the Commercials 
and the Small Specs as the Small Specs went net-long on the tech 
index.

Gold: No significant changes this week.

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
01/01 14,555 contracts net-short

Data compiled as of Tuesday 01/01 by the CFTC.



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

Vector Group - VGR - close: 28.80 change: -1.70 stop: 31.51

Company Description:
Vector Group is a holding company that indirectly owns Liggett Group 
Inc., and Vector Tobacco Inc. Vector Tobacco is a research and 
cigarette manufacturing company dedicated to the development and 
marketing of less hazardous cigarettes. (source: company press 
releases)

Why We Like It:
In the past investors would turn to groups like consumables as 
safe havens during market weakness.  Cigarettes certainly qualify 
as consumables but traders do not appear to see any safety here.  
Other players in the group like MO and RJR had been trading 
sideways during the last few weeks and actually broke out to the 
upside on Tuesday.  These positive moves have been reversed with 
Wednesday's negative market.  Another sector player is UST and it 
too appears to be rolling over into a new down trend.  Under 
performing them all is VGR.  The stock fell to its bullish 
support line on its point-and-figure chart in late December, 
which produced a small bounce.  This bounce from $31 only made it 
to the 200-dma overhead before the selling pressure continued.  
Today's breakdown puts VGR below price support of $30 and finally 
pushed it through its bullish support line on the point-and-
figure chart.  The volume has been increasing and today's volume 
of 561K is a lot stronger than the average of 190K.  We like this 
one even more for the intraday bounce back to $30 that failed 
again in the late afternoon.  Traders should confirm the move 
tomorrow but as long as shares are under $30 then bears will 
probably do okay.  The point-and-figure chart is showing a 
bearish price objective near $19.  We are only aiming for a move 
to $25 with an initial stop at $31.51.  More conservative traders 
could try a tighter stop and $31 looks like a good area.

Picked on January 9th at $31.51
Change since picked:      +0.00
Earnings Date          11/14/01 (confirmed)







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=================================================================
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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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Copyright  2001  PremierInvestor.net. and
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Do not duplicate or redistribute in any form.



PremierInvestor.net Newsletter               Wednesday 01-09-2002
                                                   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/989_2.asp
=================================================================

In section two:

Net Bulls (tech stocks)
  Bearish Stop Adjsutments: MTON

StockBottom (non tech)
  New Bearish Plays:        SPY, VGR

SplitTrader 
  Stock Split Announcement: HOTT
  

Trading Ideas
  Value Plays With Bullish Signals
  Breakout to Upside (Stocks $5 to $20)
  Breakout to Upside (Stocks over $20)
  Breakout to Downside (Stocks over $20)
  Recently Overbought With Bearish Signals (Stocks over $20)


=================================================================
Net Bulls (NB) section
==================================================================

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

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

Metro One Telecom. - MTON - cls: 26.75 chg: -1.65 stop: 30.21*new*

The sell off continues for shares of MTON as the rest of the 
wireless sector falls in concert.  The stock tried to rally higher 
earlier in the day with the markets but only made it to $29.60 
before the bears tightened their grip.  Given the stock's 
placement on the point-and-figure chart, traders may want to 
decide now what their exit price is so when the stock trades 
there they can exit for a profit.  We're going to try and stay on 
top of the stop so it doesn't get away from us.  Our new stop 
will be $30.21.  More conservative traders could use today's high 
as a guideline.

Picked on January 8th at $28.40
Change since picked:      -1.65
Earnings Date          02/07/02 (unconfirmed)






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

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

  ----------------
  New Bearish Play
  ----------------

SPDRS on the S&P 500 - SPY - cls: 115.57 chg: -0.95 stop: 118.25

Company Description:
Essentially, the S&P 500 SPDRS is a tracking stock that allows 
investors to trade the S&P 500 index like a stock instead of 
trading the SPX options or actually buying the S&P futures 
contracts.  The SPY trades just like a stock.

Why We Like It:
If you looked at the markets this morning, one may have thought 
that the two days of profit taking were over and the next rally 
was ready to start.  Unfortunately, by the end of the day, it was 
the bulls running for cover as the bears came out to play.  The 
SPY, which trades in relation to the SPX, has bounced against 
overhead resistance at 118 multiple times in the last six weeks.  
This looks like a failed rally.  The real clue will be to watch 
the bond markets tomorrow.  If money managers start buying bonds 
and the yields start dropping then that is a sign that the stock 
markets could see a few more days of negative performance.  We're 
going to start this short play with a stop at $118.25.  Our 
initial target is 110 but we'll adjust as we go along.  

Picked on January 9th at $115.57
Change since picked:       +0.00
Earnings Date                n/a 




---

Vector Group - VGR - close: 28.80 change: -1.70 stop: 31.51

Company Description:
Vector Group is a holding company that indirectly owns Liggett Group 
Inc., and Vector Tobacco Inc. Vector Tobacco is a research and 
cigarette manufacturing company dedicated to the development and 
marketing of less hazardous cigarettes. (source: company press 
releases)

Why We Like It:
In the past investors would turn to groups like consumables as 
safe havens during market weakness.  Cigarettes certainly qualify 
as consumables but traders do not appear to see any safety here.  
Other players in the group like MO and RJR had been trading 
sideways during the last few weeks and actually broke out to the 
upside on Tuesday.  These positive moves have been reversed with 
Wednesday's negative market.  Another sector player is UST and it 
too appears to be rolling over into a new down trend.  Under 
performing them all is VGR.  The stock fell to its bullish 
support line on its point-and-figure chart in late December, 
which produced a small bounce.  This bounce from $31 only made it 
to the 200-dma overhead before the selling pressure continued.  
Today's breakdown puts VGR below price support of $30 and finally 
pushed it through its bullish support line on the point-and-
figure chart.  The volume has been increasing and today's volume 
of 561K is a lot stronger than the average of 190K.  We like this 
one even more for the intraday bounce back to $30 that failed 
again in the late afternoon.  Traders should confirm the move 
tomorrow but as long as shares are under $30 then bears will 
probably do okay.  The point-and-figure chart is showing a 
bearish price objective near $19.  We are only aiming for a move 
to $25 with an initial stop at $31.51.  More conservative traders 
could try a tighter stop and $31 looks like a good area.

Picked on January 9th at $31.51
Change since picked:      +0.00
Earnings Date          11/14/01 (confirmed)







==================================================================
SplitTrader 
==================================================================

  ------------------------
  Stock Split Announcement
  ------------------------


Buy 2, Get 1 Free Sale for HOTT

A strong same store sales report was good time for a stock split 
announcement.  At least that's what the Board of Directors for Hot 
Topic, Inc. (NASDAQ:HOTT) thought.  The company came out with a 
robust sales report today for December 2001 numbers.  Actually it 
was for the five weeks ending January 5th, 2002, that stated net 
sales were up 31% to $64M while same store sales were up 6.1% 
compared to the same period last year.

The Board approved a 3-for-2 stock split in the form of a 50% 
stock dividend for its common stock.  The record date for 
shareholders will be January 23rd, 2002.  The ex-date will be 
February 6th, 2002 when shareholders will receive their extra 
stock.  This is the third split for HOTT in recent years with 
previous 2:1 splits in December of 2000 and the prior December in 
1999.  


About the company
Hot Topic, Inc. is a mall-based specialty retailer of music-
licensed and music-influenced apparel, accessories and gift items 
for young men and women principally between the ages of 12 and 22. 
The Company currently operates 346 Hot Topic stores in 48 states 
throughout the United States, six Torrid stores and Internet 
stores www.hottopic.com and www.torrid.com. (source: company press 
release)



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

ETR     Entergy Corp               33.93     +0.56
LEN     Lennar Corp                48.75     +1.73
UTR     Unitrin Inc                39.60     +0.62
NVR     Nvr Inc                   199.55     +0.55
SPF     Standard Pacific Corp      25.24     +0.86
FRC     First Republic Bank        25.75     +0.77

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

CRUS    Cirrus Logic Inc           15.45     +1.05
EPNY    E.Piphany Inc               9.91     +1.51
CCBL    C-Cor.Net Corp             17.97     +1.29
ASYT    Asyst Technologies Inc     16.66     +1.24
ISPH    Inspire Pharmaceuticals    16.29     +1.74
OVTI    Omnivision Technologies    11.30     +1.30

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

MER     Merrill Lynch & Co         57.99     +1.55
SAP     Sap Ag Ads                 36.44     +3.22
BRCM    Broadcom Corp              51.43     +2.19
BEAS    Bea Systems                20.92     +1.09
SPW     Spx Corp                  148.61     +3.61
SYMC    Symantec Corp              73.25     +3.26
OHP     Oxford Health Plans Inc    32.75     +3.51

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

VOD     Vodaphone Group            23.75     -1.70
V       Vivendi                    50.97     -1.43
QCOM    Qualcomm Inc               46.21     -1.98
COX     Cox Communications Inc     38.50     -1.22
GMST    Gemstar-TV Guide Intl      22.07     -2.13
BBI     Blockbuster Inc            21.45     -2.50

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

VZ      Verizon Communications     48.88     -0.92
AHP     American Home Products     61.22     -0.79
DIS     The Walt Disney Co         21.80     -0.99
TBH     Telecom Brazil             39.73     -1.42
NI      Nisource Inc               23.15     -0.42




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

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

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

*****************************************************************
ADVERTISING INFORMATION

For more information on advertising in PremierInvestor.net
Newsletter, or any Premier Investor Network newsletter please
contact Contact Support.

*****************************************************************


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




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