Option Investor
Newsletter

Daily Newsletter, Wednesday, 01/16/2002

HAVING TROUBLE PRINTING?
Printer friendly version
PremierInvestor.net Newsletter              Wednesday 01-16-2002
                                                  section 1 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/2408_1.asp
=================================================================

In section one:

Market Wrap:      After-hours earning more upbeat
Watch List:       UTX, BLL, GT, JEC, WLP, PG and more!
Market Sentiment: Expectations meet with reality.
Play-of-the-Day:  Spare A Few Dollars?

-----------------------------------------------------------------
U.S. Market Numbers
-----------------------------------------------------------------
MARKET WRAP  (view in courier font for table alignment)
-----------------------------------------------------------------
      01-16-2002          High     Low     Volume Advance/Decline
DJIA     9712.27 -211.88  9916.54  9711.10 1.47 bln   1141/2002	
NASDAQ   1944.44 - 56.47  1981.81  1944.32 1.88 bln   1187/2392
S&P 100   574.99 -  9.86   584.85   574.89   Totals   2328/4394
S&P 500  1127.57 - 18.62  1146.19  1127.49
RUS 2000  476.42 -  8.58   485.00   476.22
DJ TRANS 2638.34 - 49.74  2693.33  2635.36
VIX        25.26 +  0.84    25.42    24.03
VXN        49.43 +  1.41    50.75    48.58
TRIN        2.41
Put/Call    0.69
-----------------------------------------------------------------

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

After-hours earning more upbeat

Stocks traded mostly lower today despite some upside earning's 
surprises from companies like semiconductor giant Intel 
(NASDAQ:INTC), which fell 2.79% to $33.71 after handily beating 
earnings estimates yesterday.  Tonight's earnings are finding 
some buyers as Apple Computer (NASDAQ:AAPL), Compaq (NYSE:CPQ), 
Advance Micro Devices (NYSE:AMD), Symantec (SYMC) and Yahoo! Inc. 
(NASDAQ:YHOO) all reported earnings that met or beat earning's 
estimates and recouped some of today's losses in after hours 
trading.

Chipmaker Advanced Micro Devices (NYSE:AMD) fell 6.4% to $17.91 
ahead of this evening's earnings report, but after-hours trading 
had the stock up at $19.33, after the company reported earnings 
that were better than estimates.  The number 2 maker of 
microprocessors and memory chips (behind Intel) posted a net loss 
of $15.8 million, or 5 cents a share in its 4th-quarter, which 
was much better than previous guidance given to analysts that had 
expectations set for a loss of 18 cents a share.  In the year-ago 
period, AMD reported net income of $178 million, or 53 cents a 
share.  Sales in the latest quarter fell to $952 million from 
matching year-ago quarter of $1.18 billion, but were well ahead 
of previous guidance given on December 6th, that revenues were 
expected to rise 10% or a bit more than $765.9 million.  AMD said 
revenue and earnings were higher than previous guidance due to a 
year-end surge in sales of personal computer processors.

Advanced Micro Devices Chart - Daily Interval




I've pointed to the gap higher from December 6th-7th open, which 
marks the date when AMD last gave analysts guidance for 10% 
revenue growth in the quarter just announced.  Tonight's reported 
earnings/sales topped that guidance.  AMD followed tonight's 
earnings report with new guidance for its 1st-quarter for 2002 as 
it sees revenues of approximately $900 million versus previous 
guidance and estimates for $834 million.  The company said it 
still sees a "small net loss" versus previous Q1 guidance and 
estimates of a 15-cent a share loss.

I've always had a problem putting money to work in AMD on the 
long side, basically due to lack of consistent guidance from its 
management to institutional analysts.  If current guidance is on 
target, then my thinking is the stock is a "buy" and should not 
trade below $15 and upward trend.  The point and figure chart is 
currently bullish and in an upward trend, with bullish support 
currently at $13.50.  The current longer-term bullish vertical 
count is also bullish to $29.50.  First sign of trouble for 
bullish investors would be a sell signal at $15.

More earnings ....

Compaq (CPQ) $11.10... reported earnings of $0.06 a share, above 
estimates of $0.01.  Stock edged higher at $11.45

Symantec (SYMC) $66.95 -4.9% ... reported earnings of $0.78 
better than estimates looking for $0.64 a share.  Stock jumped to 
$71.12 in after-hours.

Yahoo! Inc. (YHOO) $17.87 -8.2% ... reported earnings of $0.03, 
better than estimates for earning's of $0.01.  In other news, 
YHOO announced that President and COO Jeff Mallet would step down 
in April to take advantage of greater flexibility for family and 
other business interests.  Shares of YHOO traded higher at $18.40 
in after-hours trading.

Apple Computer (AAPL) $20.78 -4.23% ... reported earnings of 
$0.11, which was inline with estimates for $0.11 a share.  Shares 
of AAPL traded up $0.82 to $21.60 in after-hours action.

Genentech (DNA) $50.78 -0.66% ... reported earnings of $0.20 a 
share, which was also inline with estimates of $0.20 a share.

Today's economic data

Today's economic data included some Consumer Price Index data 
which showed little inflation at the consumer level.  This is 
very much inline with what we saw from the Producer Price Index 
data released last Friday.  Both numbers have depicted a slow 
economy, with no signs of inflation at the producer or consumer 
level.  Today's data got very little response from the bond 
market as Treasury YIELD edged fractionally higher.

Also announced was industrial production and capacity 
utilization.  Once again, these economic numbers came in very 
close to what economists had expected and there was very little 
market reaction once they were released.  Industrial production 
fell 0.10% (down 14 out of past 15 months) and marking a yearly 
decline of 5.8%, while capacity utilization was at 74.4%.  
Inventories fell 1%, which was right near expectations for a 
decline of 0.7%.  All three of these numbers still show a weak 
economic backdrop, where manufacturers continue to deplete 
inventories, but have yet to bump up production or get any type 
of pricing leverage that would be indicative of an increase in 
demand for products.

Natural Gas inventories decline

About the only type of "economic" data I saw today that got a 
market reaction was today's American Gas Association announcement 
that natural gas inventories fell 5.14%, or 137 bcf, in the 
latest week.  Estimates were for a decline in inventories of 105-
115 bcf.  This isn't a widely watched or monitored number unless 
you're an investor in energy stocks that derive revenue's from 
gas prices.

In fact, I wasn't even looking for this data today, but I did get 
an upside alert in the February Natural Gas futures (ng02g) 
contract and the 5.41% jump in natural gas prices had me scouring 
the news wires to see what was going on.

February Natural Gas Futures Chart - Daily Interval




Today's draw down number in natural gas reserves looks to have 
surprised the market.  Natural Gas futures jumped 5.4% to close 
at their session high and trading was rather brisk today.  It's 
way to early to say a floor has been put in on natural gas 
prices, but I want note today's AGA report and market response.  
We may come back to this in the next week or so.  I've marked two 
relative highs and their dates.  What we will start doing is 
looking at some natural gas index components and mark their stock 
prices against the two relative highs of October 31st and 
December 26th.  What a bullish trader is looking for is stocks 
that are DIVERGING from price of natural gas, where we might find 
"smart money" tipping their hand to bullishness.

We've talked about shares of the Natural Gas Index (XNG.X) 
$173.54 -1.21% component Apache Corporation (NYSE:APA) $46.75 -
1.22% in recent weeks.  In fact, we had profiled shares of APA as 
bullish on 01/05/02 at $48.54, but were stopped out for a loss at 
current levels of $46.75, when the commodity traded lower and APA 
fell back below its 200-day moving average.  What we liked in 
shares of Apache (APA) was the potential reverse head and 
shoulders bottom (still in play) and longer-term bullish price 
objective of $70 from its vertical count.  We understand that APA 
derives about 50% of its cash flow from natural gas production 
and the other 50% from oil.  I haven't forgotten about this stock 
and continue to keep an eye on things.  I'm willing to cut a loss 
early, but will continue to monitor the stock that I get stopped 
out of for a loss.  Often times, these are the ones that will 
treat me best longer-term, but I was just too early.

Apache Corporation Chart - Daily Interval




The recent relative high peaks in shares of APA do differ or 
DIVERGE from what we noted in the Natural Gas futures chart.  
Note that shares of APA peaked to a relative high on October 
29th, very close to the 10/31/01 high in the natural gas chart.  
However, the natural gas futures fell to new lows just recently, 
but share of APA are still holding above upward trend.  We also 
note that APA did reach a new relative high on December 28th, 
which correlates with a relative peak in the natural gas futures 
market.  What this tells me is that we've got our eye on a strong 
energy stock that will most likely outperform in a bullish energy 
scenario, but right now we're just lacking a catalyst from the 
commodity.  I think we're going to draw from this in the future 
and we will eventually benefit very nicely in a bullish trade.

Natural Gas Index (XNG.X) Components -  APC, APA, BR, DYN, EPG, 
EOG, KMI, NFG, NI, NBL, OEI, PPP, STR, WMB.  Enron (ENE) is also 
a component, but that stock has been suspended from trading on 
the New York Stock Exchange.

Looking ahead

Expect volatility.  Today's market reaction was that of pre-
determined selling and I've got the now distinct feeling that 
traders used last night's Intel news on cutting capital equipment 
spending as an excuse to take some profits off the table and sit 
out the earnings.  Today's economic data wasn't great, but it 
wasn't a bombshell of disparity either.  At least the bond market 
didn't respond negatively and we actually saw very little action 
in the bond market.

Stocks are easing higher and recouping some of today's regular 
session losses and we're getting a very different response to 
earning's announcements tonight than we did last night.  As I 
said last night, the earning's season is just beginning and 
traders/investors should expect volatility.  

Gold stocks continue to do well as the Gold/Silver Index (XAU.X) 
rose 1.2% and was the sector winner today.  John Murphy (a well 
known technical analyst) simply said the group was in favor and a 
more defensive group.  He said something like "look, this group 
has been out of favor for 20-years and now they're starting to 
recover."  

Who knows?  Maybe natural gas prices are getting ready to surge 
and will create some fears of inflation.  If that's the case, 
then were monitoring the action, will be checking for some 
DIVERGENCE in the group and have made some past observations of 
stock that we're longer-term bullish on.  

Tomorrow were going to get more earnings and some more economic 
data to digest.  Housing starts come out at 08:30 AM and 
economists are looking for a number near 1.6 million.  Jobless 
claims are expected to be 444,000.

My current view is that an investor needs to have a minimum 6-9 
months outlook and traders will need to be rather quick at the 
trigger to capture the volatility at hand.  Subscribers may 
remember a previously profiled trade we did very well with in 
shares of XM Satellite Radio (XMSR).  Yesterday, the stock jumped 
higher by 20% and today gave it all back.  That's what I call 
volatility!

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.

----------

United Technologies - UTX - close: 59.05 change: -2.07

WHAT TO WATCH: Shares of this Dow component are really starting 
to pick up speed to the downside.  Bears really took notice when 
the stock failed twice at its 200-dma overhead.  The last few 
days of weakness in the Dow have really weighed on the stock and 
today's close is a technical breakdown below its 50-dma and any 
support it may have had at $60.  We strongly considered shorting 
the stock but with earnings expected tomorrow (unconfirmed) we 
didn't want the risk.  We heard of potential rumors that UTX may 
have asbestos exposure but couldn't confirm them either.  They 
way asbestos worries are pulling at MMM, UTX may fall whether 
they are liable or not.




---

Ball Corp - BLL - close: 65.30 change: -1.38

WHAT TO WATCH: Our favorite tin can producer, Ball, has lost its 
bullish trend.  The stock closed under its 50-dma a few days ago 
but has been holding on tight to support at $65.  We are 
considering a new short play but at this time the easiest way to 
approach it would be to use a trigger under $65 to alert you.  If 
this occurs, evaluate current market conditions at the time and 
go short if things look right.  The next level of support should 
be $60.  Yesterday's comments from Merrill about starting BLL as 
a "buy" may just be postponing the next leg down.  Earnings are 
expected on January 24th, 2002.




---

Goodyear Tire & Rubber Co - GT - close: 21.78 change: -1.07

WHAT TO WATCH: Ouch!  What happened to GT?  We didn't see any 
news on the company.  Looks like serious profit taking in action.  
We can't find a current earnings date for the stock but would 
still expect a report in the next couple of weeks.  Like a lot of 
two and three-lettered stocks, the recent market weakness has 
been taking its toll.  GT fell below its 50-dma and closed under 
the $22 level by the ending bell.  With all the price congestion 
from late November there is still a chance for a bounce between 
$21.50 and $21.75 but we would expect the stock to retest support 
at $20.  




---

Jacobs Engineering - JEC - close: 58.41 change: -2.54

WHAT TO WATCH: A glance at the chart and readers can see that JEC 
has been in a slide since mid-December.  The last few days have 
just sped up the speed of the descent.  Today's close under $60 
looks like a potential short opportunity.  The daily chart shows 
possible support at $55 but a glance at the point-and-figure 
chart shows JEC on a fresh sell signal with a potential move to 
$50 or lower.  The drop today came on strong volume emphasizing 
seller's conviction.  




---

Wellpoint Health Network - WLP - close: 125.16 change: +2.56

WHAT TO WATCH: Premier added a couple of healthcare stocks over 
the weekend and both are doing reasonably well.  Another 
healthcare player readers may want to keep an eye on is WLP.  
Shares have traded above resistance between $120 and $121 and the 
stock is in blue sky territory.  The challenge with WLP is the 
stock's hefty share price makes it a handful for smaller accounts 
to trade.  Keep an eye on it for small dips but also keep an eye 
on the calendar as WLP will announce earnings on Feb. 12th, 2002.




---

Procter & Gamble Co. - PG - close: 79.36 change: +0.09

WHAT TO WATCH: Shares of PG have been surprisingly strong over 
the last eight months gaining over a third in value despite the 
current economic recession.  The big rolling moves have made it 
an interesting trading vehicle for active followers of the stock.  
The chart depicts PG as having a wide ascending channel with slow 
moves higher followed by slower moves lower (normally).  A new 
leg higher appears to have started a few days ago.  The stock is 
under short-term resistance at $80 but we don't expect it to 
hold.  Watch for any word about their upcoming earnings report at 
the end of January.





=============
MORE TO WATCH
=============
( readers need to check the news and earnings dates on these
stocks )

LTR  - watch for a move above $60 or a pull back to the 200-dma.
MBG  - just bounced off its 200-dma, look for breakout over $24
IFF  - performed a perfect reversal off its 200-dma.  Needs to
       follow through on the move.  A close above $29 might work.
FDC  - bullish trend still intact.  Look actual close over $80.
CCE  - stuck in trading range, look for breakout over $20.
LOW  - bears are probably aiming for $40.  look for potential
       bounce.
BMS  - just produced a breakdown.  look for support at $45.
SWK  - an amazing descent almost straight down in January. look 
       for possible bounce at $40 bolstered by its 200-dma.  A
       close under $40 could be another shorting opportunity.
HRB  - we think this may trade higher during the next few months
       of tax season but would like to buy on a bounce at $40.
JCP  - look for possible bullish entry on bounce near $24.



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

Expectations meet with reality.
by Russ Moore

A parade of bullish analysts and a solid run on Wall Street had 
many investors believing a turnaround was imminent. Those 
expectations may need some alterations with the “visibility 
factor” yet to be resolved.

Intel’s disappointing spending announcement cast a dark cloud 
over the tech sector leading to a decline of -2.8 percent on the 
NASDAQ and -3.3 percent on the NDX. The DOW slipped -1.45 percent 
with steep declines registered by 3M and J.P. Morgan Chase. 
Asbestos concerns were responsible for 3M’s descent, while a huge 
earnings miss shackled JPM. 

Volume was up slightly to 1.45 billion shares on the NYSE and 
1.89 on the NASDAQ. Losers trounced winners by a 20/11 count on 
the big board and 24/12 on the tech index.

Gold continued to shine and along with the airlines, were the 
only winning sectors on the broader markets. Oil service and 
brokerages took the biggest hit. All tech sectors were seeing red 
with the downside charge being led by the Internet, chip, 
networker and software areas.

Consumer price index fell -0.2 percent versus expectations for a 
flat reading. November business inventories declined by 1.0 
percent, better than the -0.8 percent forecast. December 
industrial production fell -0.1 percent, its’ fourteenth 
consecutive drop.

Today’s after the bell reports have been favorable and could lead 
to a bounce tomorrow. However, with several heavyweights yet to 
report, I would expect to see only modest gains until one of the 
major players paints a brighter picture than we’ve witnessed thus 
far.


Wednesday 01/16 close: 25.26


VXN
Wednesday 01/16 close: 49.43


30-yr Bonds
Wednesday 01/16 close: 5.35


Total Put/Call Ratio: .91


Equity Option Put/Call Ratio: .80


Index Option Put/Call Ratio: 1.43


===

NASDAQ 100 Index (NDX/QQQ)
52-Week High: 103.51
52-Week Low:   28.19
Current close: 38.78

Volume/Open Interest
Maximum calls: 40/142,567
Maximum puts : 40/100,682

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: 574.99

Volume/Open Interest
Maximum calls: 590/6,542
Maximum puts : 580/9,410

Moving Averages
 10 DMA  588
 20 DMA  587
 50 DMA  585
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: 1127.57

Volume / Open Interest
Maximum calls: 1150/32,840
Maximum puts : 1150/27,678
Moving Averages
 10 DMA 1153
 20 DMA 1151
 50 DMA 1142
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:  9,712.27

Volume / Open Interest
Maximum Calls: 100/14,750
Maximum Puts   100/21,956

Moving Averages:
 10 DMA 10,045
 20 DMA 10,051
 50 DMA  9,913
200 DMA 10,104

Fibanocci Retracements
Relative High: 11,350.05 (05/22/01)
Relative Low    8,062.34 (05/21/01)
38%  9,308.92
50%  9,693.99
62% 10,085.60

==

Biotech Index (BTK)
52-Week High:  811.61
52-Week Low:   383.28
Current close: 531.31

Volume / Open Interest
Maximum Calls: 660/354
Maximum Puts:  540/944

Moving Averages
 10 DMA 554
 20 DMA 569
 50 DMA 579
200 DMA 543

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: 531.79

Volume / Open Interest
Maximum Calls: 570/1,005
Maximum Puts:  470/2,084

Moving Averages
 10 DMA 572
 20 DMA 551
 50 DMA 541
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: 376.92

Volume / Open Interest
Maximum Calls: 400/ 525
Maximum Puts:  360/1035

Moving Averages
 10 DMA 377
 20 DMA 380
 50 DMA 387
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, 02/11. 
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 
12/25/01     412,581   471,239   (58,658)   (9.7%)
01/01/02     338,288   407,107   (68,729)   17.1% 
01/08/02     333,742   398,283   (64,541)   (6.1%)

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
12/05/01       152,521    79,444    73,077    (6.1%)
01/01/02       127,419    55,576    71,843    (1.6%)
01/08/02       130,335    60,780    69,555    (3.1%)

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 
12/25/01      55,250    47,476     7,774   
01/01/02      29,801    37,497    (7,696)
01/08/02      30,786    37,457    (6,671)    (13.3%)

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
12/25/01       15,810    25,687   (9,877)
01/01/02       10,649     5,913    4,736   
01/08/02       10,073     6,404    3,669    (22.5%)

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 
12/25/01      15,492     7,335    8,157       .6%
01/01/02      15,820     7,553    8,267      1.3%
01/08/02      15,921     7,981    7,940     (3.9%)

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
12/25/01       4,293     9,086    (4,793)     15.4%
01/01/02       3,368     8,668    (5,300)     10.6%
01/08/02       4,380     9,188    (4,808)     (9.3%)

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        +69,555     +71,843        -64,541     -68,729

Total Open
Interest %       (+36.39%)  (+39.26%)      (-8.82%)   (-9.22%)
                 net-long   net-long       net-short  net-short


                     Small Specs             Commercials
DJIA futures     (Current) (Previous)    (Current) (Previous)
Open Interest
Net Value          -4,808     -5,300          +7,940    8,267
Total Open
interest %       (-35.44%)    (-44.03%)      (+33.22%)  (+35.37)
                 net-short   net-short     net-long    net-long


                     Small Spec              Commercials
NASDAQ 100      (Current) (Previous)    (Current) (Previous)
Open Interest
Net Value         +3,669      +4,736         -6,671    -7,696

Total Open
Interest %        (+22.27%)   (+28.60%)     (-9.78%) (-11.44%)
                 net-short   net-long      net-short  net-short


What COT Data Tells Us
----------------------
Indices:.No significant changes this week as Commercials continue 
to sit net-short on the SPX with little change over last week’s 
numbers.

Gold: Despite a red-hot week for the gold market, Commercial 
players were busy adding to their net-short positions. This may 
be an early signal that the bullish run is coming to an end. 

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
01/08 24,042 contracts net-short

Data compiled as of Tuesday 01/08 by the CFTC.



=========================
Play-of-the-Day (Bullish)
=========================
(( This is a new High Risk / High Reward Play ))


Providian Financial - PVN - close: 4.33 change: -0.46 stop: 3.99

Company Description:
San Francisco-based Providian Financial is a leading provider of 
credit cards and deposit products to customers throughout the 
U.S. The Company has more than $32 billion in managed receivables 
and more than 18 million customer accounts. (source: company 
press release)

Why We Like It:
The short answer to why we like it might be summed up as strength 
and entry point.  Providian was one of the horror stories for the 
second half of 2001 as concerns over the company's debt 
structuring and loan quality began to unravel so did its stock 
price.  Of course now the focus is on Enron, leaving a largely 
forgotten PVN a chance to rebound quietly.  The stock had been 
consolidating sideways between $2 and $4 these last few months 
but new strength has lifted shares higher in 2002.  What's even 
better news is the latest rise for PVN was on strong volume and 
recent market weakness has not been able to smother it.  PVN 
happened to be in the news a bit today as the company has agreed 
to sell its Providian Master Trust accounts to J.P. Morgan Chase 
& Co. (NYSE:JPM).  This division of PVN is about 3.3 million 
active credit card accounts worth over $8 billion.  PVN's CEO 
believes this is a great step for the company, which will help 
their capital and liquidity concerns.  Another positive for PVN 
shareholders is the company remains a potential takeover 
candidate although it is unclear who a buyer might be.  We're 
selecting it as a high risk / high reward play based on the 
stock's volatility and any further risk of additional bad news 
slamming the stock price.  The 46-cent loss today represented a 
10% drop but what we find encouraging was how the stock held on 
to recent support near $4.25.  Aggressive traders willing to take 
the heat can look at today's close as a potential entry point.  
It is very possible that PVN could slip to $4.00 and thus the 
placement of our stop at $3.99.  More conservative traders could 
take a stab at the play with a tighter stop near $4.20.  

Picked on January 16th at $ 4.33 
Change since picked:       +0.00
Earnings Date           10/18/01 (confirmed)






=================================================================
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.



PremierInvestor.net Newsletter               Wednesday 01-16-2002
                                                   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/2408_2.asp
=================================================================

In section two:

Net Bulls (tech stocks)
  Closed Bearish Play:  NXTL

High Risk / High Reward
  Bullish Play Update:  LUV - no play taken -
  New Bullish Plays:    PVN, LPX  

  
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 Closed Plays
===============

  --------------------
  Closed Bearish Plays
  --------------------

Nextel Comm. - NXTL - close: 8.04 change: +0.17 stop: 7.88

We knew that odds of our short play on NXTL being stopped out in 
today's trading were pretty good but that's why we used such a 
tight stop.  Other big players in the wireless & telecom sectors 
traded down today (NOK, VOD, ERICY, VZ) while NXTL bucked the 
trend.  Rumor has it that Verizon (VZ) said they might buy NXTL.  
This increased the selling pressure on shares of VZ while giving 
NXTL a late day boost to $8.70 before falling back again.  We 
couldn't confirm the report with a news article but do remember 
hearing something about it on the television.  At any rate, the 
newsletter was stopped out right at the open when shares of NXTL 
gapped up to $7.90, which was above our new stop of $7.88.  
Therefore, we close the play at $7.90 for a $1.10 move or +12%.

Picked on January 14th at $ 9.00 
Gain since picked:         +1.10
Earnings Date           01/28/02 (unconfirmed)





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

===============
HR PLAY UPDATES
===============

  --------------
  Bullish Update
  --------------

Southwest Airlines - LUV

The play did not trigger on the open this morning.  We 
are discarding it from the play list.


============
HR New Play
============

  -----------------
  New Bullish Plays
  -----------------

Louisiana Pacific - LPX - close: 7.50 change: -0.24 stop: 7.35

Company Description:
LP is a premier supplier of building materials, delivering 
innovative, high-quality commodity and specialty products to its 
retail, wholesale, homebuilding and industrial customers. 
(source: company press release)

Why We Like It:
Any fundamentals-type investors will probably choke when they see 
LPX on the bullish play list but don't worry; we're not playing 
it for their fundamentals.  This is purely a speculation play.  
But wait, it gets better.  This is not a speculation play about 
their up coming earnings at the end of the month but a gamble 
that the stock is overdue for a bounce and we're buying at 
support.  It should be easy to see that LPX has been range bound 
for the last several weeks between $7.50 and $9.50 with most of 
that time spent between $8 and $9.  Now that shares have traded 
back to the lower end of the channel it offers aggressive 
investors a chance to try and pick a short-term bottom.  It's 
almost like trying to grab that proverbial falling knife but at 
least this time we have already seen it bounce twice at this 
level.  Here's the set up.  If LPX opens below $7.40 tomorrow, no 
deal, no play, game over.  Otherwise we'll try and play the 
bounce with a stop at $7.35.  This should attempt to keep our 
risk to 15 cents.  Our target is only $8.75.  We figured there 
was no need to be greedy and aim for $9.00 or higher.  

Picked on January 16th at $ 7.50 
Change since picked:       +0.00
Earnings Date           01/29/02 (unconfirmed)




---

Providian Financial - PVN - close: 4.33 change: -0.46 stop: 3.99

Company Description:
San Francisco-based Providian Financial is a leading provider of 
credit cards and deposit products to customers throughout the 
U.S. The Company has more than $32 billion in managed receivables 
and more than 18 million customer accounts. (source: company 
press release)

Why We Like It:
The short answer to why we like it might be summed up as strength 
and entry point.  Providian was one of the horror stories for the 
second half of 2001 as concerns over the company's debt 
structuring and loan quality began to unravel so did its stock 
price.  Of course now the focus is on Enron, leaving a largely 
forgotten PVN a chance to rebound quietly.  The stock had been 
consolidating sideways between $2 and $4 these last few months 
but new strength has lifted shares higher in 2002.  What's even 
better news is the latest rise for PVN was on strong volume and 
recent market weakness has not been able to smother it.  PVN 
happened to be in the news a bit today as the company has agreed 
to sell its Providian Master Trust accounts to J.P. Morgan Chase 
& Co. (NYSE:JPM).  This division of PVN is about 3.3 million 
active credit card accounts worth over $8 billion.  PVN's CEO 
believes this is a great step for the company, which will help 
their capital and liquidity concerns.  Another positive for PVN 
shareholders is the company remains a potential takeover 
candidate although it is unclear who a buyer might be.  We're 
selecting it as a high risk / high reward play based on the 
stock's volatility and any further risk of additional bad news 
slamming the stock price.  The 46-cent loss today represented a 
10% drop but what we find encouraging was how the stock held on 
to recent support near $4.25.  Aggressive traders willing to take 
the heat can look at today's close as a potential entry point.  
It is very possible that PVN could slip to $4.00 and thus the 
placement of our stop at $3.99.  More conservative traders could 
take a stab at the play with a tighter stop near $4.20.  

Picked on January 16th at $ 4.33 
Change since picked:       +0.00
Earnings Date           10/18/01 (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 

CBSS    Compass Bancshares         28.84     +0.52
LNR     LNR Property Corp          33.91     +0.60
STN     Station Casinos Inc        13.72     +2.12
CHKE    Cherokee Inc               13.20     +0.96

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

MIEC    Magna Entertainment          8.00     +1.01
IDCC    Interdigital Communication  11.94     +2.48

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

PGR     Progressive Corp          145.83     +1.34
WLP     Wellpoint Health Network  125.16     +2.56
HB      Hillenbrand Industries     57.04     +1.75
MBG     Mandalay Resort Group      24.00     +1.13
CAL     Continental Airlines       31.10     +1.71
WGO     Winnebago Industries       40.70     +3.80
MNC     Monaco Coach Corp          26.35     +3.36

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

JPM     JP Morgan Chase & Co       36.20     -1.67
SI      Siemens Aktkien            60.11     -4.25
HON     Honeywell Intl.            29.05     -1.70
EBAY    Ebay Inc                   59.94     -4.09
FOX     Fox Entertainment Group    23.25     -1.20
GD      General Dynamics Corp      75.00     -2.25

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

CMCSA   Comcast Corp               36.38     -0.27
BOBJ    Business Objects           36.53     -1.86




=================================================================
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.




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.

Readers are urged to consult with their own independent financial advisors with respect to any investment. All information contained in this report and website should be independently verified.

To ensure you continue to receive email from Option Investor please add "support@optioninvestor.com"

Option Investor Inc
PO Box 630350
Littleton, CO 80163

E-Mail Format Newsletter Archives