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Daily Newsletter, Tuesday, 02/12/2002

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PremierInvestor.net Newsletter                 Tuesday 02-12-2002
                                                   section 1 of 2
Copyright  2001, All rights reserved.
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In section one:

Market Wrap:      Abundance of inside days hints of uncertainty.
Market Sentiment: Conviction has disappeared.
Play-of-the-Day:  More Telecom Fears.

-----------------------------------------------------------------
U.S. Market Numbers
-----------------------------------------------------------------
MARKET WRAP  (view in courier font for table alignment)
-----------------------------------------------------------------
      02-12-2002           High     Low     Volume Advance/Decline
DJIA     9863.70 - 21.10  9906.00  9811.60 1.09 bln   1520/1560
NASDAQ   1834.21 - 12.45  1852.22  1817.13 1.59 bln   1708/1804
S&P 100   562.51 -  2.57   565.30   560.02   Totals   3228/3364
S&P 500  1107.50 -  4.44  1112.68  1102.98             
RUS 2000  472.01 +   .69   473.55   467.67
DJ TRANS 2730.76 +  7.10  2747.75  2697.32
VIX        23.47 -  0.07    24.98    23.29
VXN        45.45 -  0.96    47.59    44.87
TRIN        1.40 
PUT/CALL    0.80
-----------------------------------------------------------------

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

Abundance of inside days hints of uncertainty

It's amazing the number of "bellwether" stocks in each of their 
respective industries/sectors that have formed some "inside days" 
on their bar charts today and tomorrow's action could have bulls 
or bears closing some positions that were slated toward the 
short-term.

You don't have to look any further than our play list and shares 
of financial giant Citigroup (NYSE:C) $45.15 -1.48%.  A short-
term trader that has been holding this one short since we 
profiled it on January 29th as a short can move down a tight stop 
if they feel fit, just above yesterday's high of $45.90.  In 
tonight's play update, we're going to cut the trade a little more 
slack with a stop at $46.15, but still give ourselves the 
opportunity to benefit from a downside move we feel is still in 
the cards.

Citigroup Chart - Daily Interval




I've tried to set the above chart to show subscribers how 
Citigroup (C) has set up the "inside day" from a relatively tight 
trading range.  This is perhaps a good example of how "tough" and 
range bound trading is right now, but may also show just how 
"easy" trading could be tomorrow.  A break above today's high at 
$45.85 (bar at top of chart) or Monday's high of $45.90 (box in 
lower left corner) could have buyers coming into the stock 
(existing bulls or bears covering more aggressively) and getting 
a rally going short-term to the $47 level as near-term tensions 
build in the stock by bulls and bears.  Conversely, a trade below 
today's low of $45.05 or Monday's low of $45.00 along with the 
break of retracement at $44.95 could have traders/investor 
looking for support near the $42.92 level.  As we look at this 
trade, we can really get the feeling that things are 50/50 at 
this point.  Our "swing vote" to the bearish side has been the 
point and figure chart, which currently carries a longer-term 
bearish vertical count of $35.  Tomorrow, a bear wants to see a 
break to the downside to help squash the recent edging higher.

Microsoft Corporation Chart - Daily Interval




Just as Citigroup (C) is a "big gun" in the financials, Microsoft 
is the big gun in the software sector.  Here too we see a tight 
intra-day range and inside day.  A break above the $61.24 level 
or even our retracement at $61.33 could move trader to the long 
side and targeting the 200-day moving average at $64.75.  A break 
below today's low of $60.02, lets say $60.00 could have the 
market assessing near-term downside to $57.55 or even the $53.76 
level.  In January, shares of MSFT traded a triple-bottom sell 
signal at the $65 level and have steadily inched their way lower 
from there to $58.83.  The longer-term bearish price objective 
remains $47, which correlates rather well with our 80.9% 
retracement level.  While the longer-term bearishness has us 
bearish on the shares, that doesn't mean there might not be a 
short-term trading rally to the 200-day if we were to see a 
short-term break to the upside.  With MACD trying to hook around, 
there could be some short-term bears willing to lock in some 
profits if the stock were to get back above the $61.33 level.  
All a short-term trader has to do is look to play the break and 
follow with a tight stop.

Tyco International Chart - Daily Interval




Tyco International (NYSE:TYC) has been on a wild ride as of late.  
Today's tight range and "inside day" can help the trader control 
his/her risk near term.  A break below today's low of $30.15 
could have bulls that stepped up to the plate from $22-$26 
locking in gains on the first sign of weakness, while any move 
above the $31.42 level or Monday's high of $31.90 could have 
complacent bears running for the door as they've already given 
back some nice gains from the bottom.  We noted in past 
commentary that share of Tyco (TYC) did achieve their bearish 
vertical count of $24, that had been put in place back in early 
January.  If the recent trading at $22 was the bottom, then TYC 
may be a good one to keep an eye on for bullishness where a bull 
can perhaps control their risk with a tight stop.  

Notice the "inside day" from February 6th.  A trader may have 
traded the stock long on February 7th at $28.17 as the stock 
broke ABOVE the inside day from February 6th.  A trader that was 
trading the "inside day" technique might still be long the stock 
and would be following with a stop just under today's low of 
$30.15.

There are others too!

AOL Time Warner (NYSE:AOL) $27.68 -1.14% and Qualcomm 
(NASDAQ:QCOM) $40.50 -1.88% also show that today was an "inside 
day" on their bar charts.  A trader that can monitor these stocks 
and set some upside and downside alerts at these tight ranges 
will get a pretty good feel for how things are trading on a 
short-term basis.  In recent commentary we noted that both of 
these stocks had achieved/exceeded their bearish vertical counts 
by one or two dollars and that bears should be looking to lock in 
gains.  Both stocks have moved higher since those vertical counts 
and may hint that bears aren't sticking around when an objective 
has been met, regardless of how much "bad news" is out on the 
stock.

On Friday, we noted that shares of Qualcomm (QCOM) had achieved a 
bearish vertical count of $37 from its point and figure chart and 
had also come pretty close to Professor Davis' study of 
probabilities.  Not wanting to be too greedy, we felt that 
traders that were short the stock from our "High Risk/Reward" 
section should move stops down to $37.  I'm not really looking to 
trade QCOM tomorrow, but since it carries a heavy weight in the 
NASDAQ-100, it's a stock that could impact some broader market 
action and simply keeping an eye on the stock and understanding 
which direction (if any) the stock breaks from the inside day, 
may give a trader some extra insight into the wireless area of 
technology.

Speaking of "inside days"

We're getting ready to "pull the plug" on our bullish trade in 
retailer Chico's FAS (NYSE:CHS) $32.99 -1.52%.  This one has been 
very good to bullish traders since our profile on January 26th 
and has bucked the broader market trend like a champ.  We're 
going to use the "inside day" to help control our risk.  If the 
stock wants to run to our original target, we'd love to see it 
happen, but we're just not willing to let any type of "terrorist" 
negativity erode the handsome gains.

Chico's FAS Chart - Daily Interval




We've been trailing our bullish trade in CHS with a stop and now 
that bulls have an 11.6% gain going, we're going to use the 
"inside day" to protect that gain.  CHS has recently traded two 
other "inside days" and each day following the stock has moved 
higher.  That would be fine and perhaps the 3rd time's a charm 
and the stock will run to our target of $34.75, which is just shy 
of our upper level of "fitted retracement."  From $32.99, that 
leaves about $1.76 of upside to our target, and about $1.74 to 
downside support at 80.9% retracement.  In my book, that's about 
50/50 from here, so we'll use the "inside day" and any DIVERGENCE 
from the past two inside days and a downside move as a good 
excuse to exit the trade with a decent profit.

Trading rally for tech, not out of the question

One reason I'm showing some "inside days" tonight is that the 
NASDAQ-100 Bullish Percent ($BPNDX) from www.stockcharts.com is 
currently showing 32% of the stock in the NASDAQ-100 now showing 
a buy signal on their charts.  Last week, this indicator reached 
the "oversold" level of 28% and a reading of 36% would have this 
indicator flashing the "bull alert" status.  

NASDAQ-100 Bullish % Chart - 2% box




Our shorter-term and more volatile bullish percent for measuring 
the internals of the NASDAQ-100 recently reached the "oversold" 
level below the 30% level.  In June and July of last year (red 6 
and red 7) we did see some short-term trading rallies to the 
upside.  It would take a 3-box reversal higher, a reading of 34%, 
to get this indicator into "bull alert" status.  The recent 
strength in the biotechs has helped the internals of the NASDAQ-
100 start to show some improvement and at a lower level of risk, 
this group of stocks could see some bears covering and using the 
"inside days" in some of the stocks mentioned above as "reasons 
to cover."

We do not suggest that bullish tech traders "load the boat" on 
technology stocks as we understand that the internals are still 
weak.  Instead, should a trader be following a couple of stocks 
that they are comfortable with and perhaps have an "inside day" 
trade setup, then there is some reason to believe that there may 
be a short-term rally in the making from an "oversold" level in 
the NASDAQ-100.

Other things to be cognizant of 

The Dow Jones Transportation Average (TRAN) has rebounded back 
above its rounding out 200-day moving average and once again 
trades right at its longer-term downward trend at $2,730 which 
has been somewhat of a gravitational trend dating back to the May 
1999 highs.  If your a trader that has been overly bearish this 
market, but are a believer in market history and that transports 
often lead a market advance higher in the early stages of an 
economic upturn, then current action while "neutral" at downward 
trend still should get both a bulls and bears attention.  This 
group of stocks has been wavering back and forth from this 
downward trend since early January.  The lower highs and lower 
lows following the trend still hint of bearishness, but if we see 
some type of sharp move or DIVERGENCE from this longer-term 
downward trend, be alert as this group could spark broader market 
direction based on the "rate" of DIVERGENCE from trend.

We have NOT seen any type of "rush" to the Treasury bond market 
by investors looking for safety.  Despite today's "FBI Terrorist 
Alert," the Treasury bonds actually found some willing sellers.  
Wouldn't you know it, the YIELD on the 10-year ($TNX.X) finished 
the session at 4.967% and getting right back near the 5.0% level 
that has become somewhat of a pivot point for stocks.  A bold 
break above the 5.0% level could have the bond market signaling a 
rotation out of this bond and some cash could then find its way 
into stock.  Once again, another observation that doesn't appear 
as being overly bearish toward stocks.

Strategy

With so many "inside days" and some of our key sectors like the 
Treasury bonds and Transports hovering at rather "neutral" 
levels, I think it best to trade some of the inside day's, but 
only trade with partial positions.  

I think our play list and profiled stops speaks to what could be 
a near-term pivot point for traders.  If you are one that truly 
believes the worst is yet to come for stocks, then Clestica 
(NYSE:CLS) $38.87 -3.4%, Citigroup (NYSE:C) $45.15 -1.48% and 
Silicon Valley Bancshares (SIVB) $22.40 +0.49% are still at 
levels where a bearish trader can take some action with tight 
stops nearby.  Today's action in Time Warner Telecom 
(NASDAQ:TWTC) $9.30 -9.79% was an excellent bearish trade near 
the open of trading, but I don't like trying to chase 9.79% with 
further short action.

From those plays in the bullish section, it is probably not a 
surprise that Phelps Dodge (NYSE:PD) $36.36 +0.80% is one that I 
like from the bullish side.  The 200-day moving average is just 
ahead at $36.61 and this is the "first hurdle" for our trade that 
needs to be cleared.  We'll be watching this one close and I'd 
like to see a break above the 200-day moving average come on 
strong volume of more than 2.5 million shares.  

Subscriber will note we recently added another "airfreight" stock 
in Airborne Freight (NYSE:ABF) $15.80 -1.86% to our bullish play 
list.  Last week we set a tight stop on our bullish play in 
shares of Federal Express (NYSE:FDX) and that stock rebounded 
sharply after that pullback that stopped us out.  Both ABF and 
FDX have recently set 52-week highs and this sector of the 
transports is an area we feel the bullish traders can trade and 
not have as high of a likelihood of getting crushed by some 
unpleasant surprise.  Nonetheless, we want to still follow the 
trades with some rather tight stops until we see some type of 
"breaking free" from longer-term trend by the Dow Transports 
(TRAN).

Any trade at this point that gets a gain of more than 7-10%, I 
want to be moving my stops in the direction of profitability.  
The broader market averages are still rather range bound and a 
10% gain in a short amount of time may well outpace the broader 
market averages on a year-to-date type of performance.

Jeff Bailey
Senior Market Technician


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

Conviction has disappeared.
by Russ Moore


Light volume sessions have become commonplace of late, as 
investors search for reasons to buy, or sell.

The major indices chopped around for most the day, closing with 
modest losses of -0.2 percent on the DOW, -0.7 percent on the 
NASDAQ and -0.9 percent on the NDX. Big board volume came in at 
1.07 billion shares while the NASDAQ saw 1.60 billion shares 
change hands. Losers edged winners by a 16/15 count on the NYSE 
and 18/17 on the tech index.

Lots of red ink on the tech side with the Nortel spillover 
handing the Networking sector the largest loss. Biotech, drug, 
airline, utility and gold sectors enjoyed decent gains on the 
broader markets.

Analysts spent the better part of December and January trying to 
pump us up for the impending economic/market recovery. Seven 
weeks into the new-year we find ourselves looking at a rather 
poor market performance. The DOW opened 2002 at 10,021 and 
currently sits at 9,863. The NASDAQ began 02’ at 1,965 and closed 
today at 1,834. Of course, the fall-off has been attributed to 
the “natural pullback” after those lofty, post 9/11 gains. 

To be fair, earlier predictions were dealt a mighty blow with the 
Enron affair, but that fiasco does not account for the continued 
lack of guidance from corporate America. Stocks have enjoyed 
hearty gains on the basis of a second half recovery, 
unfortunately the evidence for that recovery has yet to show 
itself. Oh sure, we’re seeing modest improvement in the economic 
numbers, but what about the corporate side? We’ve seen that most 
companies have been able to meet their drastically lowered 
earnings numbers, however, when it comes to looking past 
tomorrow, their lost. Is it any wonder why investors are being a 
little cautious about throwing their money in Wall Street’s 
direction?

In this emotional roller coaster we call the stock market, 
corporate, and investor conviction is a principle component to a 
sustained market move in either direction. Right now, conviction 
is non-existent, paving the way for range-bound markets in the 
days ahead. 


VIX
Tuesday 02/12 close: 23.47


VXN
Tuesday 02/12 close: 45.45


30-yr Bonds
Tuesday 02/12 close: 5.46


Total Put/Call Ratio: .80


Equity Option Put/Call Ratio: .74


Index Option Put/Call Ratio: 1.04


===

NASDAQ 100 Index (NDX/QQQ)
52-Week High: 103.51
52-Week Low:   28.19
Current close: 36.73

Volume/Open Interest
Maximum calls: 39/56,732
Maximum puts : 35/65,329

Moving Averages
 10 DMA 36
 20 DMA 37
 50 DMA 39
200 DMA 39

Fibanocci Retracements
Relative High: 43.24 (12/06/01)
Relative Low:  34.97 (02/08/02)
38% 38.13
50% 39.11
62% 40.10

===

S&P 100 Index (OEX)
52-Week High:  834.93
52-Week Low:   491.70
Current close: 562.51

Volume/Open Interest
Maximum calls: 575/7,360
Maximum puts : 520/9,175

Moving Averages
 10 DMA  559
 20 DMA  567
 50 DMA  578
200 DMA  596

Fibanocci Retracements
Relative High: 600.80 (01/04/02)
Relative Low:  546.13 (01/30/02)
38% 567.00
50% 573.44
62% 579.99

===

S&P 500 (SPX)
52-Week High:  1530.01
52-Week Low:    965.80
Current close: 1107.50

Volume / Open Interest
Maximum calls: 1150/22,752
Maximum puts : 1150/19,285
Moving Averages
 10 DMA 1102
 20 DMA 1115
 50 DMA 1135
200 DMA 1161

Fibanocci Retracements
Relative High: 1176.97 (01/07/02)
Relative Low:  1077.78 (02/06/02)
38% 1115.67
50% 1127.37
62% 1139.27

==

DJIA (INDU)
52-Week High:  11,518.83
52-Week Low:    8,235.81
Current close:  9,863.74

Volume / Open Interest
Maximum Calls:  96/12,039
Maximum Puts    90/20,342

Moving Averages:
 10 DMA  9,773
 20 DMA  9,777
 50 DMA  9,918
200 DMA 10,080

Fibanocci Retracements
Relative High: 10,300.15 (01/07/02)
Relative Low    9,529.46 (01/30/02)
38%  9,823.86
50%  9,914.80
62% 10,007.28

==

Biotech Index (BTK)
52-Week High:  811.61
52-Week Low:   383.28
Current close: 520.91

Volume / Open Interest
Maximum Calls: 460/677
Maximum Puts:  520/606

Moving Averages
 10 DMA 491
 20 DMA 508
 50 DMA 550
200 DMA 545

Fibanocci Retracements
Relative High: 625.15 (12/06/01)
Relative Low:  450.20 (02/07/02)
38% 517.03
50% 537.67
62% 558.66

==

Semiconductor Index (SOX)
52-Week High: 1280.84
52-Week Low:   362.00
Current close: 548.01

Volume / Open Interest
Maximum Calls: 580/1,248
Maximum Puts:  500/1,327

Moving Averages
 10 DMA 544
 20 DMA 537
 50 DMA 547
200 DMA 551

Fibanocci Retracements
Relative High: 606.88 (01/09/02)
Relative Low:  499.09 (01/22/02)
38% 540.26
50% 552.98
62% 565.91

==

Pharmaceutical Index (DRG)
52-Week High:  455.28
52-Week Low:   339.49
Current close: 379.78

Volume / Open Interest
Maximum Calls: 390/690
Maximum Puts:  380/825

Moving Averages
 10 DMA 373
 20 DMA 375
 50 DMA 380
200 DMA 390

Fibanocci Retracements
Relative High: 403.83 (11/26/01)
Relative Low:  365.22 (02/08/02)
38% 379.93
50% 384.51
62% 389.17

*****

CBOT Commitment Of Traders Report: Friday, 02/08. 
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 
01/22/02     342,841   394,041   (51,700)   (9.3%)
01/29/02     345,583   401,923   (56,340)    9.0%
02/05/02     347,583   401,569   (53,986)   (4.3%)

Most bearish reading of the year: (111,956) - 3/6/01
Most bullish reading of the year: (41,144)  - 5/1/01

Small Traders   Long      Short      Net      %Change
01/22/02       125,451    65,423    60,028    (8.6%)
01/29/02       128,826    63,127    63,127     5.1%
02/05/02       128,235    64,404    63,831     1.1%

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 
01/22/02      30,671    34,103    (3,432)     23.0%
01/29/02      31,577    33,651    (2,974)    (13.3%)
02/05/02      32,357    35,405    (3,048)       2.5%

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
01/22/02       11,885     8,787    3,098  
01/29/02        9,709     8,293    1,416    (54.2%)
02/05/02       10,416     8,173    2,243     58.2%

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 
01/22/02      18,152    11,013    7,139      6.6%
01/29/02      19,956    12,171    7,785      9.0%
02/05/02      21,868    12,068    9,800     25.9%

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
01/22/02       5,424     8,969    (3,545)     (5.9%)
01/29/02       5,872     9,709    (3,837)     11.1%
02/05/02       5,764    10,528    (4,764)     24.2%
 
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        +63,831     +65,699        -53,986    -56,340

Total Open
Interest %       (+33.13%)  (+34.23%)      (-7.21%)   (-7.54%)
                 net-long   net-long       net-short  net-short


                     Small Specs             Commercials
DJIA futures     (Current) (Previous)    (Current) (Previous)
Open Interest
Net Value          -4,764     -3,837          +9,800   +7,785
Total Open
interest %       (-29.24%)    (-24.63%)      (+28.88%)  (+24.48)
                 net-short   net-short       net-long    net-long


                     Small Spec              Commercials
NASDAQ 100      (Current) (Previous)    (Current) (Previous)
Open Interest
Net Value         +2,243      +1,416         -3,048    -2,074

Total Open
Interest %        (+12.07%)   (+7.86%)     (-4.50%) (-3.18%)
                 net-long   net-long      net-short  net-short


What COT Data Tells Us
----------------------
Indices:.Very little change in Commercial activity. Keep in mind 
that we are looking for an increase in diversion between 
Commercials and Small Specs. 

Gold: Commercials were busy adding to their net-short positions 
this week while gold continued to move higher. The precious metal 
seems to be attracting a lot of attention these days perhaps as a 
result of the growing weakness in the Japanese markets. 

01/08 24,042 contracts net-short
01/15 53,938 contracts net-short
01/22 50,959 contracts net-short
01/29 31,515 contracts net-short
02/05 58,180 contracts net-short

Data compiled as of Tuesday 02/05 by the CFTC.




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

Time Warner Telecom Inc - TWTC - cls: 9.30 chg: -1.01 stop: 10.51

Company Description:
Time Warner Telecom Inc., headquartered in Littleton, Colo., 
delivers "last-mile" broadband data, dedicated Internet access 
and voice services for businesses in 44 U.S. metropolitan areas. 
Time Warner Telecom Inc. is one of the country's premier 
competitive telecom carriers delivers fast, powerful and 
flexible, fiber, facilities-based metro and regional optical 
networks to large and medium customers. (source: company press 
release)

- ORIGINAL WRITE UP: February 8th, 2002 -

Why We Like It:
Depressed telecom stocks is nothing new for traders.  Previous 
Wall Street darlings like Lucent and Nortel have been in the poor 
house for months.  One of these previous high flyers is TWTC.  
TWTC is partially owned by the AOL-Time Warner conglomerate.  It 
is no secret that 2001 was a bad year for telecom companies.  
TWTC's stock price fell from the high 70s and didn't stop until 
it hit its October 2001 lows near $6.  With the market in rebound 
mode through the end of 2001 TWTC was able to climb back to the 
$19 level but could not overcome resistance at $20.  Now the 
technology bears have a death grip on the industry and TWTC has 
fallen back to the $10 level.  Earnings were announced last week 
on Feb. 5th.  Revenues were stronger than estimates but earnings 
were pretty dismal with the company losing 28 cents a share 
versus 3 cents a share the year before.  The stock failed to 
rally on Friday and shares appear to be forming a pennant 
formation during the last four or five sessions with higher lows 
and lower highs (of course the lower highs have been a problem 
for most of 2002).  We still believe the trend is down but we're 
going to force TWTC to prove it by crossing our trigger point.  
We'll start the play if shares can trade to $9.49.  Once 
triggered we'll start with a stop at $10.51.  More aggressive 
traders can try and jump in early and try and play if shares fall 
under $10 again.  Our target will be a re-test of the October 
lows near $6.  Wait for the trigger!

- Most Recent Update: February 12th, 2002 -

Our new tech short play from the weekend newsletter was triggered 
today when shares fell through our entry price of $9.49.  We had 
discussed how TWTC was forming a pennant formation with higher 
highs and higher lows but the overall trend was negative and we 
expected a downside breakout.  Monday's session merely saw shares 
coil tighter for a small loss while the market was in rally mode.  
This was a big clue for traders that there was no real strength 
in the stock.  When shares opened today and quickly fell below 
the $10 level it was another clue for traders and a breakout of 
the pennant.  We put our trigger at $9.49 because we wanted to be 
sure the new trend was definitely down and not just a fake out 
move.  Volume was stronger than normal at 2.3 million versus the 
average of less than 800K.  The stock actually traded to $9.00 a 
few times before bouncing near the close.  More conservative 
traders could certainly try a tighter stop and one suggestion we 
discussed was today's high at $10.33 but for the time being the 
newsletter will leave ours at 10.51.  A failed rally back to $10 
may be another opportunity to short TWTC but we don't mind a play 
at current levels.  Our ultimate goal is near the $6.00 level but 
we don't have an official exit/target price yet.  Short-term 
traders may want to go for the quick turnaround and consider an 
exit near $7.50, which would still be a nice gain.

- Play-of-the-Day Comments: February 12th, 2002 -

The cautious comments from Nortel this morning cast a pall across 
the technology landscape and the gloom was heaviest for the 
telecom sector.  The drop in TWTC triggered our entry into a 
bearish play and shares closed within thirty cents of their low 
for the day.  We think TWTC has a good chance of confirming the 
breakdown today and if it doesn't then a failed rally at the $10 
level looks like a good place to consider a short entry as well.

Picked on February 12th at $ 9.49 
Change since picked:        +0.19
Earnings Date            02/05/02 (confirmed)






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of any stock but an information resource to aid the investor
in making an informed decision regarding trading in stocks. It
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staff of PremierInvestor.net may own, buy or sell securities
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Do not duplicate or redistribute in any form.



PremierInvestor.net Newsletter                 Tuesday 02-12-2002
                                                   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/94_2.asp
=================================================================

In section two:

Net Bulls
  New Bearish Play:      
  Bullish Play Updates:  COGN
  Bearish Play Updates:  CLS, TWTC

Stock Bottom / Active Trader
  Bullish Play Updates:  ABF, CHS, HRB, PD, UNH
  Bearish Play Updates:  C, SIVB

High Risk / High Reward
  Bullish Play Updates:  GMST

Split Trader
  Announcements -        JEC - 2-for-1 split 
                         WERN - 4-for-3 split (Monday)


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 Play Updates
===============

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

Cognos Inc. - COGN - close: 28.67 change: +0.22 stop: 27.98 *new*

We continue to see a real lack of leadership in the larger 
software stocks that should be marching out in front of the 
sector.  Instead we are left with stocks like COGN gaining ground 
individually despite a flat GSO.X software index over the last 
two sessions.  We mentioned in the Monday newsletter that COGN 
was trading higher due to a number of positive comments about 
their specific niche of the software world.  One analyst felt 
that the industry sector COGN was in could see revenue growth of 
30 to 35 percent over the next two to three years.  We also made 
$29.50 our official exit price for this play and shares traded to 
$29.08 at its high today.  Due to the weakness in the Nasdaq and 
many of the big cap Nasdaq 100 stocks we are going to be more 
conservative with our stop placement on COGN.  Adjusting our stop 
to $27.98 should protect a gain of +$2.51 or almost 10%.  
Considering the current market atmosphere ten percent sounds 
pretty good.  Currently we're up about 12.5%.

Picked on January 25th at $25.47
Gain since picked:         +3.20
Earnings Date           04/10/02 (unconfirmed)






  --------------------
  Bearish Play Updates
  --------------------

Celestica - CLS - close: 38.87 change: -1.38 stop: 42.05 

As we expected, the $40 level is proving to be new overhead 
resistance for CLS.  Shares tried to rally through it on Monday 
with the broader market rally and did manage to close at $40.25. 
Fortunately for the bears, weakness took over again at the open 
today and shares dropped back below $39.  We still like this area 
as a potential entry point for a short position but if you prefer 
to see more confirmation wait for shares to break below $38.  The 
descending 10-dma may be additional resistance for the bears as 
the play progresses.  We're not too surprised that shares are 
trading sideways a bit at this level since bears are fighting 
with the bullish support trend on the point-and-figure chart.  Of 
course an actual break through below it will be a huge negative 
for the bullish camp.

Picked on February 5th at $39.40
Gain since picked:         +0.53
Earnings Date           01/31/02 (confirmed)




---

Time Warner Telecom Inc - TWTC - cls: 9.30 chg: -1.01 stop: 10.51

Our new tech short play from the weekend newsletter was triggered 
today when shares fell through our entry price of $9.49.  We had 
discussed how TWTC was forming a pennant formation with higher 
highs and higher lows but the overall trend was negative and we 
expected a downside breakout.  Monday's session merely saw shares 
coil tighter for a small loss while the market was in rally mode.  
This was a big clue for traders that there was no real strength 
in the stock.  When shares opened today and quickly fell below 
the $10 level it was another clue for traders and a breakout of 
the pennant.  We put our trigger at $9.49 because we wanted to be 
sure the new trend was definitely down and not just a fake out 
move.  Volume was stronger than normal at 2.3 million versus the 
average of less than 800K.  The stock actually traded to $9.00 a 
few times before bouncing near the close.  More conservative 
traders could certainly try a tighter stop and one suggestion we 
discussed was today's high at $10.33 but for the time being the 
newsletter will leave ours at 10.51.  A failed rally back to $10 
may be another opportunity to short TWTC but we don't mind a play 
at current levels.  Our ultimate goal is near the $6.00 level but 
we don't have an official exit/target price yet.  Short-term 
traders may want to go for the quick turnaround and consider an 
exit near $7.50, which would still be a nice gain.

Picked on February 12th at $ 9.49 
Change since picked:        +0.19
Earnings Date            02/05/02 (confirmed)







==================================================================
Stock Bottom / Active Trader (AT) section
==================================================================

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

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

Airborne Inc - ABF - close: 15.80 change: -0.30 stop: 14.95

Our new long play for ABF was triggered in Monday's session when 
shares traded to a high of $16.35, bypassing our entry price of 
$16.05.  The upside move was fueled by positive earnings comments 
from chief rival Fedex (FDX).  FDX said that earnings would come 
in at the top or slightly exceed current forecasts for the next 
quarter.  FDX claims that a lot of the good news was due to 
strong growth in the expanded ground-package shipping business.  
It is unsure whether FDX is taking marketshare from the US Postal 
Service, UPS, ABF or all three.  Optimistic commentators 
speculated that a pick up in business for FDX was a positive sign 
that the economy was turning around and thus also a positive for 
ABF.  Other brokerage analysts were more cautious about the FDX 
comments but secretly we think they are short the stock.  At any 
rate, the pull back in ABF back under the $16 mark should be 
viewed as cautious but more aggressive traders should see it as 
an entry point to go long.  A tighter stop at $15.39 wouldn't be 
a bad idea but we'll leave ours at $14.95 for the moment.  We 
would confirm stock direction on Tuesday before committing new 
capital.

Picked on February 11th at $16.05 
Change since picked:        -0.25
Earnings Date            02/01/02 (confirmed)




---

Chico's F A S Inc - CHS - cls: 32.99 chg: -0.51 stop: 32.49 *new*

The rally in the retail sector on Monday lead the RLX.X right up 
to the 940-945 level of resistance.  This helped push shares of 
CHS up over the $33 level and actually trading to $34 before 
slipping back by the close.  The RLX managed to hang to most of 
those gains today despite weakness in the Dow Jones and the 
Nasdaq and CHS lost about 50 cents due to profit taking.  We're 
encouraged by the intraday support we see in CHS' chart at $32.80 
today but don't believe it will hold up if the markets post 
strong declines tomorrow.  Therefore, given the current market 
environment, we are going to really tighten our stops on CHS to 
protect decent gains while still allowing for some room tomorrow 
morning.  Our exit price of $34.75 is still in affect but our new 
stop will be $32.49, which should protect a gain of $2.94 or 
9.9%.  Currently the newsletter is up $3.44 or 11%.  A breakout 
in the RLX above 945 would be very positive for the group and for 
CHS but we don't have the faith in the broader markets to leave 
our stop too wide on CHS.

Picked on January 25th at $29.55 
Gain since picked:         +3.44
Earnings Date           03/05/02 (unconfirmed)




---

H R Block - HRB - close: 47.15 chg: -0.29 stop: 44.25

There has been nothing new to report for HRB in the news or due 
to stock price movement since the weekend.  Shares have traded 
sideways as it consolidates at the $47.00 level.  This is 
disappointing that the stock didn't participate in the market 
rally on Monday but it is encouraging that it didn't participate 
in the market decline today either.  Very conservative traders 
could attempt to protect capital with a tight stop under $46 but 
we are going to leave ours at $44.25 as we wait and see if any 
sort of earnings run develops for the end-of-the month 
announcement.  

Picked on February 5th at $47.01 
Gain since picked:         +0.14
Earnings Date           02/27/02 (unconfirmed)




---

Phelps Dodge - PD - close: 36.36 change: +0.29 stop: 33.99

Our newest play is off to a decent start with a 30-cent gain in 
the face of a declining market.  Shares of PD confirmed the move 
over $36 from yesterday but paused when they approached the 200-
dma looming overhead.  We discussed this in the original write up 
on Monday.  Some traders may prefer to wait for PD to actually 
close above the 200-dma before initiating a position and 9 out of 
10 times I would be one of these traders waiting for the move.  
However, Jeff has me convinced that PD's relationship to copper 
prices is much more powerful than the technical resistance 
presented by the 200-dma.  If you disagree with him then it is 
certainly okay to wait.  Checking the current copper futures, it 
did tick up a very small amount today but more importantly it 
does look like it's about to rally back to the 74-cent level.  A 
breakout over 74 cents would be a powerful force on shares of PD.  
It is our hope that PD will be able to hold the $36 level as 
support but an intraday bounce near the $35 area may be an 
attractive entry for active traders able to watch the stock 
during the day.  A break below $35 would be a preliminary warning 
signal for bullish traders to tighten their stops.

Picked on February 11th at $36.07
Change since picked:        +0.29
Earnings Date            01/30/02 (confirmed)




---

UnitedHealth Group - UNH - cls: 75.56 chg: +1.16 stop: 73.45 *new*

A positive earnings report by Wellpoint (WLP) last night and the 
ensuing positive comments from analysts today helped lift the 
healthcare sector amidst a market decline.  A few analysts were 
very bullish on WLP and significantly raised their price targets.  
UNH joined the rally and closed strongly over the $75 level on 
decent volume.  One thing we can say about UNH is that shares 
have been a lot less volatile than their peers lately.  Of course 
that means that we're not seeing some of the gains either but 
slow and steady is okay with us.  MACD is starting to lose it 
oomph and we'd like to see a strong couple of days to really 
confirm the move over $75 again.  We have decided to raise our 
stop to $73.45 and protect a small gain should shares reverse 
course.

Picked on January 11th at $71.75 
Gain since picked:         +3.81
Earnings Date           01/24/02 (confirmed)





  --------------------
  Bearish Play Updates
  --------------------

Citigroup Inc - C - close: 45.15 change: -0.68 stop: 46.15 *new*

Shares of Citigroup did trade higher on Monday with the market 
rally but couldn't conquer current overhead resistance at $46, 
which had been previous support prior to February.  Selling 
pressure began anew for C on Tuesday but the lackluster volume 
traded eroded any amount of conviction for the bears.  This looks 
like a good place to consider a new short position with a tight 
stop but confirm stock direction first.  A move under $45 may be 
the signal you're looking for.  Given some of the "inside days" 
we saw across different market sectors and large cap stocks we 
feel that Wall Street could see the exchanges go either way even 
though we're expecting weakness.  Thus we are going to lower our 
stop to $46.15, which is 30 cents over today's high.  Check out 
tonight's wrap for Jeff's take on the markets.

Picked on January 29th at $46.71
Gain since picked:         +1.56
Earnings Date           01/17/02 (confirmed)


 

---

Silicon Valley - SIVB - cls: 22.40 chg: +0.11 stop: 23.01 

Both the BIX.X and the BKX.X banking indices continued the Friday 
rally into Monday's trading session which supported a number of 
weaker financial stocks like SIVB.  However, while the BIX 
stalled at resistance at 620 and the BKX couldn't break 
resistance at 820, shares of SIVB actually traded higher to 
$22.85 before slipping back into the close.  The 20-dma has 
fallen to $22.95, which should support the $23 level as 
resistance but the stock isn't acting very weak at the moment.  
Actually, the MACD, which had been bottoming out, actually 
produced a bullish crossover today.  We would urge strong caution 
for traders in the play and a tightening of stops to protect 
capital.  We would not consider new positions until SIVB closed 
back under the $22 mark.

Picked on January 18th at $22.93
Gain since picked:         +0.53
Earnings Date           01/16/02 (confirmed)


 




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

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

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

Gemstar-TV Guide Intl. - GMST - cls: 17.18 chg: -1.59 stop: 16.49

The breakout in shares of GMST from Friday did produce a follow 
through move on Monday but the rally didn't last long.  The stock 
closed near its highs on Monday at $18.77 but selling pressure 
hit fast this morning and the stock closed back below the $18 
level.  Looking at the chart we see that the 20-dma may have been 
the culprit where traders decided that was the level to take 
short-term profits (thus, the 20-dma is overhead resistance).  In 
a contrary move to the stock price today, the MACD completed its 
second day in a bullish crossover.  The overall weakness in the 
markets and the tech sector in general may keep any gains in GMST 
to a minimum.  Shares are already trading lower in after-hours 
markets (around the $17.05 area).  Aggressive traders may want to 
consider a bounce off of $17 as a possible entry but we'd prefer 
a move back over $18 as confirmation.  Under $17 and we'd be very 
cautious and expect to be stopped out.  We would not recommend 
any new positions at this time until shares were back over $18.  
If the stock continues to drift lower, both the bulls and the 
bears will be focusing on he $16.00 mark as the battlefield to 
win therefore shares could trade sideways from here unless one 
group quickly wrests control from the other.

Picked on February 8th at $18.11 
Gain since picked:         -0.93
Earnings Date              03/02 (unconfirmed)






==================================================================
Split Trader - Stock Split (ST) section
==================================================================

==============
Announcements
==============

Engineering A 2-for-1 Split.

Shareholders for Jacobs Engineering Group Inc (NYSE:JEC) received 
a welcome surprise after the market close this evening.  JEC's 
Board of Directors has approved a 2-for-1 stock split in the form 
of a stock dividend.  The shareholder record date will be March 
1st, 2002.  

We can look for the payable date to be on or near April 1st, 2002, 
which would lead us to believe the ex-dividend date or day shares 
trade at their new stock price will be Tuesday, April 2nd.

After the split, JEC will have approximately 54 million shares 
outstanding.  

Traders may want to keep an eye on JEC as shares have been falling 
from the $75 level to bounce along support between $59 and $60.  
The current trend of lower highs is bearish but maybe a stock 
split can help turn investor sentiment around for JEC.

The stock closed at $63.18 on Tuesday.  For a current quote,
click here:
http://user.financialcontent.com/pin1/quote.cgi?account=pin1&ticker=JEC


About the company
Jacobs Engineering Group Inc. is one of the world's largest 
providers of technical professional services. With more than 
21,000 home office employees, the company offers full-spectrum 
support to industrial, commercial, and government clients in 
diverse markets. Services include scientific and specialty 
consulting as well as all aspects of design, construction, and 
operations & maintenance. (company press release)


-----
Late Monday
-----

Trucking Company Offers 33% More!

Late after the market close on Monday Werner Enterprises, Inc. 
(NASDAQ:WERN) announced that its Board of Directors had approved a 
4-for-3 stock split.  The split will take place as a 33 1/3 
percent stock dividend.

The payable date for the split will be March 14th, 2002 for 
shareholders of record on February 25th, 2002.  Shares will likely 
trade ex-dividend on Friday, March 15th.

Fractional shares will be paid in cash to shareholders.

The stock closed at $26.14 on Monday.  For a current quote,
click here:
http://user.financialcontent.com/pin1/quote.cgi?account=pin1&ticker=WERN


About the company
Werner Enterprises is a full-service transportation company 
providing truckload services throughout the 48 states, portions of 
Canada and Mexico. C.L. Werner founded the Company in 1956. Werner 
is one of the nation's largest truckload carriers with a fleet of 
7,775 trucks and 19,775 trailers as of December 31, 2001.
(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 

EXC     Exelon Corp                51.76     +0.90
AYE     Allegheny Energy           34.74     +0.62
CBSS    Compass Bancshares         29.50     +0.60
KCP     Kenneth Cole Productions   17.56     +0.75

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

THOR    Thoratec Corp              17.50     +1.30
VAST    Vastera Inc                15.33     +1.14
PEGS    Pegasus Solutions Inc      16.20     +1.08

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

WLP     Wellpoint Health Network  130.02     +2.73
MLNM    Millennium Pharmaceuticals 21.47     +1.22
BBI     Blockbuster Inc            21.01     +1.70
PDLI    Protein Design Labs Inc    23.56     +1.50
VRTX    Vertex Pharmaceuticals     23.68     +1.92
FRED    Fred's Inc                 31.57     +1.31
WW      Watson Wyatt & Co          23.56     +1.91

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

RTRSY   Reuters Group              48.51     -2.12
MHP     McGraw-Hill Companies      63.08     -2.27
HDI     Harley-Davidson Inc        50.99     -3.04
LNCR    Lincare Holdings Inc       24.86     -2.75
ATTC    AT&T Canada Inc            22.55     -2.98

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

PDS     Precision Drilling Corp    25.21     -0.69



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

Please read our disclaimer at:
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Copyright  2001  PremierInvestor.net. and
The Premier Investor Network.
Do not duplicate or redistribute in any form.




DISCLAIMER

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