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Daily Newsletter, Thursday, 02/21/2002

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PremierInvestor.net Newsletter               Thursday 02-21-2002
                                                  section 1 of 2
Copyright  2001, All rights reserved.
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In section one:

Market Wrap:      Some heads are turning
Market Sentiment: Business as usual.
Play-of-the-Day:  Leading The Way Lower!

-----------------------------------------------------------------
U.S. Market Numbers
-----------------------------------------------------------------
MARKET WRAP  (view in courier font for table alignment)
-----------------------------------------------------------------
      02-21-2002           High     Low     Volume Advance/Decline
DJIA     9834.68 -106.49 10029.94  9831.98 1.34 bln   1290/1839
NASDAQ   1716.24 - 59.33  1769.37  1716.24 1.81 bln   1188/2319
S&P 100   548.58 -  9.01   559.57   547.98   Totals   2478/4158
S&P 500  1080.95 - 17.03  1101.50  1080.24             
RUS 2000  458.44 -  8.81   467.71   458.43
DJ TRANS 2714.21 + 17.08  2752.08  2693.92
VIX        25.72 +  1.46    26.20    23.48
VXN        48.06 +  1.36    48.73    45.72
TRIN        1.43 
PUT/CALL    0.82
-----------------------------------------------------------------

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

Some heads are turning

There are some heads turning in the stock market and it's not the 
type of heads that most think of.  In past commentary we've 
mentioned how the market is somewhat like an "inchworm" and even 
a snake.  There's the head portion (strongest stocks) the middle 
part of the body (those that are rather neutral) and those at the 
tail (the weakest stocks).  

Today's market action should be alarming for the bulls.  As a 
technical analyst, the action I'm seeing is that of extreme 
bearishness where the bulls are starting to throw in the towel 
while they hold onto their losers and begin selling their 
winners.  This type of market action usually comes on a "final" 
leg down as investors that have held onto weak stocks in hopes 
that they'll rebound (and they didn't) begin selling their 
winners to lock in some gains to make up for the losses they 
continue to hold.  

It's the selling of the winners that has the head of the snake 
turning back to look at the tail to see what's pulling at it.  To 
help explain this, I'm going to start with PremierInvestor.net's 
play list from the "Current Play List."  I try my best to keep a 
running total each month of bullish and bearish plays 
gains/losses to make sure our analysis and trading strategy is in 
tune with the market.  I also use this portfolio to give me a bit 
of a historical perspective of past observations (good or bad.)

Hypothetical account with $5,000 invested in BULLISH plays




The above chart is BULLISH plays only.  Those in black are plays 
that have been closed out and the $Gain/Loss is that based on a 
$5,000 investment.  I'm also looking at %Gain/Loss to see just 
how much heat we take.  As a general rule, I don't like to take 
more than 8%-10% risk in a trade.  I also want to keep track of 
"Running Total."  Can I make a living from trading, regardless of 
what the market is doing?  Those in Pink are those plays we still 
carry as "open" and have been marked to the market close.

Do you see what I see at first glance?  Those in pink that are 
still open plays has H&R Block (NYSE:HRB) carrying the only gain.  
It's also the "oldest" play on the list that was initiated on 
February 2nd.  While a 5.9% gain as of tonight's close may not be 
an impressive gain, we might compare that to the S&P 500 
performance during the same time period and 3.6% decline to gain 
perspective.  The more recent trades are showing losses and based 
on trades that have been closed, I'm inclined to think that the 
current losses are due to a more bearish market environment and 
not necessarily the result of poor stock picking.

As it relates to "heads are turning" I'm going to focus on Cognos 
(NASDAQ:COGN) that we had profiled as bullish on January 26th and 
dropped as a bullish play on February 13th after the stock traded 
higher and through our bullish target of $29.50.  With the stock 
now trading $24.59 (the bulk of decline has been last three 
sessions), I get the distinct feeling that bulls are starting to 
sell their winners.

Cognos Chart - Daily Interval




Cognos (COGN) shares treated our bullish play list and 
subscribers very well, but not wanting to try and squeeze every 
last drop of water from the sponge, we took the exit at what now 
looks to be the near-term peak.  If you owned the stock in the 
$12-$18 range, but also held some stocks that were down 20% from 
purchase price, what might you be doing with COGN?  Notice the 
sharp decline lately on light volume.  I'm thinking that the 
MARKET thinks the stock could get cheaper so why step in and buy 
here if we think she may fall to the $20 level?  That may also be 
what a market maker is thinking and based on our retracement, 
market maker support might not come into play until the $22 
level.

Now, before we go hog wild and think short, remember that the 
current market environment is uncertain.  Not just uncertain to 
the downside.  Don't forget that somebody threw the "buy switch" 
yesterday and the markets turned from lower to rally mode.  The 
problem I have with going overboard and shorting a stock with 
good relative strength like COGN, is if the market environment 
were to turn bullish, being overly short a recent winner can be 
costly.

Here's an interesting stock where several things certainly look 
to be in play.  Imagine you own 100,000 shares of a stock that 
you bought from $14-$17 an have an average cost basis in it at 
$15.50.  Then imagine that you thought the stock had potential to 
trade $25.50 at some point in the future.  Now imagine the stock 
recently traded $25.50.  Now imagine that you sat in on a 
conference call with the company and they said that they are 
still optimistic about the future, but the business environment 
remains challenging and current outlook is uncertain.  What would 
you do?  Especially if you had a bunch of other stocks that were 
under water in the account/mutual fund.

Storage Technology Chart - $1 and $0.50 box




The bullish vertical count in Storage Technology's (NYSE:STK) 
$19.48 -16.89% point/figure chart indicated a potential bullish 
price objective of $25.50 (the stock actually traded $25.65 on 
February 6th)!  The bullish triangle formation and resulting buy 
signal at $14 may have had you building a position in the stock 
for your mutual fund.  Today, the company held a conference call 
with analysts and stated that they remained optimistic about the 
future, but the business environment remained challenging.  Is 
that statement anything different than we've heard from Cisco 
Systems (NASDAQ:CSCO) in recent moths/weeks or other companies?  
I don't think so.  However, when a stock has perhaps reached a 
bullish vertical count and you've got some big gains, no sense in 
hanging around to see if profits will erode.  After all, your 
mutual fund may be holding some other stocks that haven't faired 
nearly as well.  Bullish target achieved, so pull the plug?

Sidelines for now

We're going to let our bullish play list stay pat for now.  We 
may add a stock or two, but from what I'm seeing in stocks like 
COGN and STK, the odds of putting together some gains near-term 
are going to be tough.  If the broader market is sell side like 
it sure seems to be now, then no sense trying to risk further 
capital at this point.  There are some stocks that are looking 
strong and I still like the trades we've got listed in our play 
list from the bullish side.

The Dow Transports (TRAN) actually gained 0.63% at 2,714 today to 
close above their 200-day moving average, which resides at 2,697.  
Guess where they closed on a technical basis?  That downward 
trend dating back to May 1999 that's where!  Airborne Freight 
(NYSE:ABF) came darned close to setting another 52-week high 
today, but the broader market negativity held the stock in check.  
We'll keep our stop right where it is at as our play list still 
has some nice gains and can take a little heat.  If you're 
account has been a little shaky and you don't feel like taking 
heat, then move to the sidelines, but don't feel like you've 
failed.  If there's one thing that buying technically strong 
stocks will do for a bull, is give them a chance to move to the 
sidelines with their account still intact.

The bullish trade that looks to have the most "risk" right now is 
our recently added Biotech HOLDRS (AMEX:BBH) $117.40 -2.16%.  
These little buggers held tough all day until the last two hours 
of trading.  While I'm never happy with a 2.16% loss, today's 
action does give hint that this group is finding some 
sponsorship.  The broader NASDAQ-Composite fell 3.34% and the 
narrower NASDAQ-100 fell 4.26% today.

In after hours trading, Amgen (NASDAQ:AMGN) $57.65 -2%, announced 
that they were going to offer $2.5 billion in zero coupon senior 
convertible notes and said it would use approximately $650 
million to repurchase shares in the open market.  The immediate 
reaction in after-hours trading looks negative with some trading 
at the $56.55 level.  In the past we've talked about how market 
participants may view these convertible offerings as dilutive or 
how hedge funds may use the convertible as leverage to short the 
common stock.  Since AMGN makes up a good portion of the Biotech 
HOLDRS (BBH) I'd expect some weakness at the open in both AMGN 
and the HOLDRS.  In last night's market wrap, we talked about 
AMGN's technicals and will monitor those observations closely.

How about them bears!

I'm perfectly willing to give equal time to bulls and bears.  We 
reviewed our "bullish" play list, now lets look at the "bearish 
play list."  I do the same thing here as that from above.  
Hypothetical $5,000 investment in each pick and same discipline 
of using stops.

Hypothetical account with $5,000 invested in BEARISH plays




Our bearish play selection list hasn't been as "active" as the 
bullish play list, but it hasn't had to be.  The statistics show 
that some of the better gains are found in bearish markets so you 
don't have to have an account full of bearish trades as long as 
you've got a couple at the right time and the right environment.  

Isn't it interesting that the two shorts that are still open 
(pink) with the largest gains have a lot in common.  Both are 
"computer technology" related and both were from the "bearish 
triangle" pattern that we pointed out on the point and figure 
charts.  We remember too well Professor Davis' study from Purdue 
University where he found the "bearish triangle" to be profitable 
87.5% of the time for an average gain of 33.3% (for the bearish 
trader) in a 2.5 month time span on average.  We're about halfway 
there on the % gain side, so its time to move down some stops and 
remove some risk from the trade.  I would be surprised if the 
both of the stocks fell straight down to a 33% decline as there 
will be short-covering rallies.  However, if every short trade I 
ever initiated showed a gain of 10%, I'd be a very happy camper.

Now what's going on with Lehman Bros. (NYSE:LEH) $55.85 -2.54%?  
Why is it down just 3.76% since profiled?  We discussed one 
possibility in Tuesday night's wrap.  We calculated the bearish 
vertical count at $56 and the stock did achieve that level and 
actually exceed it by $1.20 to $54.80.  She can always go lower 
still and under current market conditions there can still be some 
downside left.  We've got a tight stop and will let the MARKET 
determine the outcome.  Today's rally came right to the bottom of 
that triple-bottom and kept things in check.  If she's going to 
break to our target of $52, it should be within the next day or 
two and the way some of these stocks have been pegging their 
vertical counts, we'll be happy with $52.

Still some downside

Yesterday's action along with today's has the NASDAQ-100 Bullish 
Percent ($BPNDX) from www.stockcharts.com back in "bear 
confirmed" status with 31% of the stocks in this market showing a 
point/figure buy signal.  The traffic light has turned red once 
again for many 4-lettered stocks and this indicator can always go 
to 2% like it did in September.

This has us looking at a potential short in shares of Microsoft 
(NASDAQ:MSFT) $58.05 -3.08% on a break at $58.  That would be a 
good action point on the point/figure chart as it would be a 
double-bottom sell signal.  A less aggressive bear may want to 
see a trade at $57.50 (just to try and make sure the break isn't 
a "bear trap"), but with a bearish vertical count of $47, this 
one still has some good potential downside.

Microsoft Chart - $1 box




Today's low for Microsoft (MSFT) was $58.01.  There could be some 
very stubborn bulls at this level, but if they back off and we 
were to see a trade at $58, this would be a spread triple bottom 
sell signal.  According to Professor Davis' study, the spread-
triple bottom under bear market conditions is profitable for a 
bearish trader 86.5% of the time, for an average gain of 24.9%, 
over a 4.6 month time span.  A bear that shorts the stock on the 
break lower at $58, follows with a stop near $63 and targets the 
lower end of our channel as diagramed may like this trade.  I do.

Final Note

Just because our "hypothetical portfolio" is shows with a $5,000 
investment in each pick, doesn't mean that you have to trade 
$5,000 per trade to make money in the market.  One reason I show 
the percentages is that this is what traders/investors should be 
concerned with or monitoring.

I would also suggest that traders/investors include into their 
trading the discipline of outlining what a "full position" is for 
your account.  Too many times, I see traders/investors buying 
1,000 shares of a stock.  If your discipline is stated in share 
size, then you cannot consistently measure your risk.  Again, 
1,000 shares of a $10 stock is very different than 1,000 shares 
of a $20 stock.  

Conversely, $5,000 of a $20 stock, is the same as $5,000 of a $10 
stock.  It's still $5,000.  And it's very consistent and 
disciplined.  Consistency and discipline are two very important 
ingredients in successful trading/investment.

Jeff Bailey
Senior Market Technician


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

Business as usual.
Russ Moore

Any hope of a continuation rally was dashed with more accounting 
concerns and poor corporate growth prospects grabbing center 
stage.

The news wasn't all bad, in fact, the leading economic indicators 
number along with the Philly Fed index data were both very 
positive. Another signal that an economic recovery may be just 
around the corner.

Early action on the DOW was positive, however, late day selling 
pressure on the tech side proved too much to overcome, handing 
the index a loss of -1.1 percent. The NASDAQ was very weak in the 
late going, falling -3.3 percent by the closing bell. The NDX 
plunged -4.3 percent.

Volume was modest with 1.33 billion shares moving on the big 
board and 1.84 billion on the NASDAQ. Losers trounced winners by 
a margin of 18/13 on the NYSE and 23/12 on the tech index.

Airlines, gold, oil service, oil and natural gas were the broad 
market winners. Tech sectors were seeing red all day with the 
chip (-6.67 percent), and networking sectors (-5.95 percent) 
leading the slide.

The S&P investment policy group summed up our current situation 
perfectly in its weekly research note. The group noted equity 
premiums continue to rise in the wake of the Enron scandal and 
the increased scrutiny of accounting methods. "This will place 
additional pressure on still-elevated valuations. How will the 
investor trust be restored? Time and increasingly detailed 
accounting reports".


VIX
Thursday 02/21 close: 25.72


VXN
Thursday 02/21 close: 48.06


30-yr Bonds
Thursday 02/21 close: 5.38


Total Put/Call Ratio:  .82


Equity Option Put/Call Ratio:  .70


Index Option Put/Call Ratio: 1.46


===

NASDAQ 100 Index (NDX/QQQ)
52-Week High: 103.51
52-Week Low:   28.19
Current close: 33.48

Volume/Open Interest
Maximum calls: 40/126,719
Maximum puts : 37/143,576

Moving Averages
 10 DMA 35
 20 DMA 36
 50 DMA 38
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: 548.58

Volume/Open Interest
Maximum calls: 580/5,664
Maximum puts : 520/5,821

Moving Averages
 10 DMA  558
 20 DMA  561
 50 DMA  575
200 DMA  594

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: 1080.95

Volume / Open Interest
Maximum calls: 1100/39,019
Maximum puts : 1150/45,072
Moving Averages
 10 DMA 1099
 20 DMA 1106
 50 DMA 1129
200 DMA 1157

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:  9,834.68

Volume / Open Interest
Maximum Calls: 100/19,839
Maximum Puts    98/43,377

Moving Averages:
 10 DMA  9,844
 20 DMA  9,812
 50 DMA  9,916
200 DMA 10,061

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: 484.35

Volume / Open Interest
Maximum Calls: 520/927
Maximum Puts:  520/932

Moving Averages
 10 DMA 495
 20 DMA 498
 50 DMA 537
200 DMA 543

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: 507.26

Volume / Open Interest
Maximum Calls: 550/1,265
Maximum Puts:  500/1,267

Moving Averages
 10 DMA 542
 20 DMA 542
 50 DMA 546
200 DMA 549

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: 379.50

Volume / Open Interest
Maximum Calls: 400/300
Maximum Puts:  380/500

Moving Averages
 10 DMA 377
 20 DMA 375
 50 DMA 378
200 DMA 389

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, 02/15. 
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 
01/29/02     345,583   401,923   (56,340)    9.0%
02/05/02     347,583   401,569   (53,986)   (4.3%)
02/12/02     355,276   412,868   (57,592)    6.6%

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
01/29/02       128,826    63,127    63,127     5.1%
02/05/02       128,235    64,404    63,831     1.1%
02/12/02       126,730    59,902    66,828     4.7%

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 
01/29/02      31,577    33,651    (2,974)    (13.3%)
02/05/02      32,357    35,405    (3,048)      2.5%
02/12/02      32,712    34,841    (2,129)    (30.1%)

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
01/29/02        9,709     8,293    1,416    (54.2%)
02/05/02       10,416     8,173    2,243     58.2%
02/12/02        9,009     7,415    1,594    (29.0%)

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 
01/29/02      19,956    12,171    7,785      9.0%
02/05/02      21,868    12,068    9,800     25.9%
02/12/02      26,811    16,488   10,323      5.3%

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
01/29/02       5,872     9,709    (3,837)     11.1%
02/05/02       5,764    10,528    (4,764)     24.2%
02/12/02       4,562    10,038    (5,476)     15.0%
 
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        +66,828     +63,831        -57,592    -53,986

Total Open
Interest %       (+35.81%)  (+33.13%)      (-7.50%)   (-7.21%)
                 net-long   net-long       net-short  net-short


                     Small Specs             Commercials
DJIA futures     (Current) (Previous)    (Current) (Previous)
Open Interest
Net Value          -5,476     -4,764          +10,323   +9,800
Total Open
interest %       (-37.51%)    (-29.24%)      (+23.84%)  (+28.88)
                 net-short   net-short       net-long    net-long


                     Small Spec              Commercials
NASDAQ 100      (Current) (Previous)    (Current) (Previous)
Open Interest
Net Value         +1,594      +2,243         -2,129    -3,048

Total Open
Interest %        (+9.71%)   (+12.07%)     (-3.15%) (-4.50%)
                 net-long   net-long      net-short  net-short


What COT Data Tells Us
----------------------
Indices:.We mentioned on Thursday that we’ll need to see some 
accumulation by the big players if a rally is going to get 
underway. We’re not seeing any signs yet, as the Commercial 
players held on to their net-short positions while the Small 
Specs added to their net-longs. 

Gold: Commercial activity has been a little puzzling of late. 
Gold has been enjoying a solid run over the last few weeks and 
yet, the big players have been adding to their net-short holdings 
(bearish). We’re going to dig a little deeper and see if we can 
provide an explanation for their behavior. 

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
02/12 62,223 contracts net-short

Data compiled as of Tuesday 02/12 by the CFTC.



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

Microsoft - MSFT - close: 58.05 change: -1.85 stop: 61.01

Company Description:
Founded in 1975, Microsoft is the worldwide leader in software, 
services and Internet technologies for personal and business 
computing. The company offers a wide range of products and 
services designed to empower people through great software -- any 
time, any place and on any device. (source: company press 
release)

Why We Like It:
The breakdown in the software sector has been lead by weakness in 
its leader, Microsoft.  Shares have been in a steady decline 
since their last earnings report on January 17th.  In the last 
couple of weeks the stock tried to put in a bottom and rally 
attempt off a bounce near $59 but all it succeeded in doing was a 
three-box pull back on its point-and-figure chart.  It is the p-
n-f chart that confirms this ugly downtrend in the daily.  
According to Bailey, he thinks MSFT will head sub-$50 prices.  We 
suspect there will be some support at $55 and $52.50 but we'll 
target $50 for now with a longer-term target of $48.  We will 
initiate the play with a stop at $61.01.

Picked on February 21st at $58.05 
Change since picked:        +0.00
Earnings Date            01/17/02 (confirmed)







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

PremierInvestor.net Newsletter                  Thursday 02-21-2002
                                                     section 2 of 2
Copyright  2001, All rights reserved.
Redistribution in any form is strictly prohibited.

The entire newsletter is best viewed in COURIER 10 for alignment
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To view this email newsletter in HTML format with imbedded
charts and graphs, click here:
http://www.PremierInvestor.net/htmlemail/022102_2.asp
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In section two:

Net Bulls
  New Bearish Play:      CHKP, MSFT
  Bullish Play Updates:  BBH
  Bearish Play Updates:  CLS, PMCS

Stock Bottom / Active Trader
  New Bearish Play:      C
  Bullish Play Updates:  ABF, COL, FRX, HRB
  Bearish Play Updates:  LEH

High Risk / High Reward
  Bearish Play Updates:  ADLAC

Split Trader
  announcement:          DF: 2-for-1 split announcement
                         PMI: 2-for-1 split announcement
                         WLP: 2-for-1 split announcement
                         ELMS: 21-for-20 split announcement
                         YORW: 2-for-1 split announcement

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


==================================================================
Net Bulls (NB) / Tech Stock section
==================================================================

============
NB New Plays
============

  -----------
  New Bearish
  -----------

Check Point Software - CHKP - cls: 27.48 chg: -1.37 stop: 30.05

Company Description:
Check Point Software Technologies is the worldwide leader in 
securing the Internet. It is the confirmed market leader of both 
the worldwide VPN and firewall markets. The company's Secure 
Virtual Network (SVN) architecture provides the VPN and security 
infrastructure that uniquely enables secure and reliable Internet 
communications. SVN solutions, as delivered in the company's Next 
Generation product family, secure business communications and 
resources for corporate networks, remote employees, branch 
offices and partner extranets. (source: company press release)

Why We Like It:
We highlighted CHKP as a potential bearish play on the Wednesday 
watch list as the stock failed to truly participate in the late 
day market-wide rally.  Today's failed rally attempt in the GSO.X 
software index at 160 helped lead CHKP to a new relative low and 
to prices not seen since October.  It is today's close under the 
$28 level that spurred our play selection today.  The stock was 
already weak after its mid-January earnings announcement but now 
we feel CHKP will be in for a retest of its September lows near 
$20.  We are going to start the play with a stop at $30.05.

Picked on February 21st at $27.48 
Change since picked:        +0.00
Earnings Date            01/15/02 (confirmed)





---

Microsoft - MSFT - close: 58.05 change: -1.85 stop: 61.01

Company Description:
Founded in 1975, Microsoft is the worldwide leader in software, 
services and Internet technologies for personal and business 
computing. The company offers a wide range of products and 
services designed to empower people through great software -- any 
time, any place and on any device. (source: company press 
release)

Why We Like It:
The breakdown in the software sector has been lead by weakness in 
its leader, Microsoft.  Shares have been in a steady decline 
since their last earnings report on January 17th.  In the last 
couple of weeks the stock tried to put in a bottom and rally 
attempt off a bounce near $59 but all it succeeded in doing was a 
three-box pull back on its point-and-figure chart.  It is the p-
n-f chart that confirms this ugly downtrend in the daily.  
According to Bailey, he thinks MSFT will head sub-$50 prices.  We 
suspect there will be some support at $55 and $52.50 but we'll 
target $50 for now with a longer-term target of $48.  We will 
initiate the play with a stop at $61.01.

Picked on February 21st at $58.05 
Change since picked:        +0.00
Earnings Date            01/17/02 (confirmed)





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

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

Biotech HOLDRs - BBH - close: 117.40 chg: -2.60 stop: 114.00

Negative earnings news from the likes of CIEN quickly routed an 
already fragile market and the Nasdaq ended lower by 3.3%.  This 
was enough to send tech-interested traders to the sidelines and 
the BBH fell 2% by the close after trading higher most of the 
day.  The biggest losers in the BBH basket were AFFX -4.88%, MLNM 
-3.4%, IMNX -3% and ICOS -3% while QLTI actually closed higher by 
2.4%.  The new relative low on the Nasdaq has us cautious over 
all and we would probably not be eager to place bullish bets on 
anything tech including biotechs right now.  Traders will want to 
take a wait and see approach.  Wait and see if the $116 level 
will hold for the BBH, which was the most recent low or the $115 
level.

Picked on February 20th at $120.00
Gain since picked:           -2.60
Earnings Date                  N/A




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

Celestica - CLS - close: 33.07 change: -2.67 stop: 35.51 *new*

The new bearish trend or should we say the confirmation of the 
recent bearish breakdown is really coming to fruition in shares 
of CLS.  Wednesday's trading saw shares move from the $37 area 
then down to $34 followed by a bounce back to towards $36 (give 
or take a dime or two).  Today's move was just ugly from start to 
finish if you are a bull.  The weakness in the Nasdaq that was 
accentuated by the negative news from CIEN increased investors 
uneasiness and had traders moving to the sidelines and taking 
their money with them.  Volume was strong for CLS today with 3.77 
million shares trading.  The stock is clearly short-term oversold 
but with shares closing at their low for the day it is a bad sign 
for Friday's session.  We did some more analysis of the point and 
figure chart of CLS while also looking at some retracement levels 
of the stock from its September to December run up.  We've 
decided to alter our exit strategy.  Shares "should" see support 
between $31 and $30.  The $31 level is the 61.8% retracement 
while the $30 level is just round-number psychological support.  
However, we now believe that CLS could fall closer to the $26 
level.  Therefore we are moving our exit price to $27.50.  This 
way we can get out before the rest of the crowds at what could be 
potential support.  Secondly, we are also lowering our stop to 
$35.51, which is close to a 10% gain in the play from our picked 
price of $39.40.  New positions can be added but we would 
probably wait for a bounce and/or another failed rally.

Picked on February 5th at $39.40
Gain since picked:         +6.33
Earnings Date           01/31/02 (confirmed)




---

PMC Sierra - PMCS - close: 16.93 change: -2.27 stop: 18.64 *new*

More telecom weakness, this time from the likes of CIEN hit the 
Nasdaq and the sector pretty hard today.  Investors also pummeled 
PMCS even more after hearing about the downgrade of chip giant 
Intel.  As you know, PMCS is a chipmaker focused on telecom, 
optical and wireless equipment.  Shares of PMCS fell almost 12% 
today and closed right on the 61.8% retracement level.  We're 
using a retracement tool from the Sept/October lows to the 
December high.  Like our CLS play, shares of PMCS are definitely 
short-term oversold but its close near its low of the day is a 
bearish sign for tomorrow's trading.  Bulls can hope that the 
61.8% retracement level might be support.  However, if shares 
bounced from here, we would suspect it to be mere short-covering 
while bears look for new entries.  We are also going to alter our 
target on PMCS and initiate an exit price of $14.15.  In the 
meantime we'll lower our stop to $18.64, which should protect 
close to a 10% gain in the play.  

Picked on February 15th at $20.71 
Gain since picked:          +3.78
Earnings Date            01/24/02 (confirmed)





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

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

  -----------
  New Bearish
  -----------


Citigroup Inc - C - close: 42.80 change: -0.72 stop: 45.05

Company Description:
Citigroup, the preeminent global financial services company with 
192 million customer accounts in more than 100 countries, 
provides consumers, corporations, governments and institutions 
with a broad range of financial products and services, including 
consumer banking and credit, corporate and investment banking, 
insurance, securities brokerage, and asset management. Major 
brand names under Citigroup's trademark red umbrella include 
Citibank, CitiFinancial, Primerica, Smith Barney, Banamex, and 
Travelers. (source: company press releases)

Why We Like It:
As our regular readers know we turned bearish on Citigroup last 
month and initiated a bearish play but were stopped out by the 
thinnest of margins several sessions ago.  Two days after we were 
stopped out by a penny the stock collapsed again as we had 
expected it would.  Now shares have bounced back and closed the 
gap from Tuesday's gap down.  The highs today found resistance at 
the $44 level, which was the top of the gap and the late day 
market sell-off pushed shares of C back under the $43 level.  The 
overall market bearishness is weighing heavily on the markets but 
Citigroup should suffer even worse due to continuing concerns 
over exposure to South America and the Enron scandal.  As the 
Enron probes continue to search for fault it's possible some of 
that blame and/or negativity will reach C due to their 
involvement in the lucrative partnerships with Enron.  The point-
and-figure chart shows the stock at its bullish support line, 
which might suggest that we're early in this bearish play.  
However, a breakdown under the bullish support line could lead to 
investors unraveling their long positions quickly and the stock 
could fall to the $38 level or worse.

Picked on February 21st at $42.80
Change since picked:        +0.00
Earnings Date            01/17/02 (confirmed)


 


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

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

Airborne Inc - ABF - close: 15.98 change: -0.18 stop: 14.95

The Dow Transports turned in a small bounce today but any sector 
closing in the green today is worth another look.  The rollover 
in the DJIA and the terrible day in the Nasdaq was enough to pull 
the Transports off their highs and ABF fell back below the $16 
level after trading to $16.40 at its high.  We're still feeling 
optimistic about our play in ABF but we'd really like to see 
shares begin to close above the $16 level and breaking out above 
$16.50.  This isn't the strongest environment to be considering 
bullish positions so enter cautiously.

Picked on February 11th at $16.05 
Gain since picked:          -0.07
Earnings Date            02/01/02 (confirmed)




---

Rockwell Collins - COL - close: 22.04 change: +0.69 stop: 20.49

Investors were looking for any signs of strength to hide their 
money with other sectors of the market suffering from earnings 
worries or worse.  One of those sectors that traders were moving 
money into was defense.  Unfortunately, the overall market 
bearishness was enough to pull shares of COL down from their 
highs near $23 today.  This is another failed test at resistance 
of $23.  Traders will want to confirm stock direction before 
initiating new positions.  We are beginning to expect that COL 
will continue to consolidate higher under the $23 level for the 
next few sessions before finally breaking out convincingly.  We 
see no rush to enter new positions at this time.  In the news 
today was a press release from COL that said they would be 
presenting at the Salomon Smith Barney Global Industrial 
Manufacturing Conference at 1:30 p.m. EST on Feb. 27th.  

Picked on February 15th at $22.50 
Gain since picked:          -0.46
Earnings Date            04/17/02 (unconfirmed)




---

Forest Labs - FRX - close: 80.17 change: -0.18 stop: 77.49

The DRG.X drug index continued its late day rally from yesterday 
into the early morning session on Thursday.  Unfortunately, the 
broader market weakness weighed on the group throughout the day 
and the late day sell-off in the Dow Jones helped bring the drug 
sector towards its lows.  FRX traded in a relatively narrow range 
and we now feel that investors may want to wait for shares to 
break out above the $83 level or look for bounces near $78 again 
for a more low risk entry.  

Picked on February 15th at $82.58 
Gain since picked:          -2.41
Earnings Date            04/16/02 (unconfirmed)




---

H R Block - HRB - close: 49.00 chg: -0.10 stop: 45.95 

Bulls should notice that volume has been rising the last three 
sessions for HRB.  It's possible that investors are beginning to 
accumulate the stock ahead of its Feb. 27th earnings report.  We 
are optimistic because the stock has broken out above the $48 
level, which had been tough resistance the last couple of weeks.  
It would not be unexpected to see HRB fall back to the $48 level 
and bounce before moving higher.

Picked on February 5th at $47.01 
Gain since picked:         +1.97
Earnings Date           02/27/02 (confirmed)





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

Lehman Brothers - LEH - cls: 55.85 chg: -1.46 stop: 58.46 

Like several stocks, shares of LEH rallied higher with the late 
day market rally on Wednesday.  Unfortunately for the bulls both 
the XBD.X and LEH failed to rally through resistance that was 
previous support.  This is good news for the bears and we would 
expect shares to fall lower from here but confirm stock 
direction.  In the news recently, Merrill Lynch cut its earnings 
estimates for LEH for both 2002 and 2003 EPS numbers due to 
reduced equity underwriting and M&A fees.  Also in the news were 
several articles about the SEC issuing fraud charges on an ex-
Lehman Brothers branch manager.  While it's doubtful at this 
point that LEH would have any liability the negative press 
doesn't help.

Picked on February 15th at $58.03 
Gain since picked:          +2.18
Earnings Date            12/20/01 (confirmed)





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

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

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

Adelphia Communications - ADLAC - cls: 20.62 chg: +1.02 stop: *note*

The last day and a half have seen some bullish comments surface 
about cable operators like ADLAC with the latest word from 
analyst powerhouse, Goldman Sachs.  The positive outlook was 
enough to push shares of ADLAC to its 10-dma before the late day 
sell-off brought it back under the $21 level.  The 3.3% drop in 
the Nasdaq looks pretty ominous and we feel that ADLAC will not 
be able to sustain any rally attempt with a bearish market.  Thus 
we are interpreting today's action as a failed rally at the 10-
dma and the bottom of its previous trading range between $22 and 
$24.  Truly aggressive traders might see this as a shorting 
opportunity with a stop above today's high or just above $22.  We 
are still waiting for shares to move through our trigger price of 
$18.74.  

Picked on February Xth at $xx.xx <-- see trigger 
Change since picked:       +0.00
Earnings Date           03/08/02 (unconfirmed)







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

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

Ripe for a Split, Dean Foods Offers 2-for-1

One of the last split announcements declared this evening was from 
Dean Foods Company (NYSE:DF).  They released word that their Board 
of Directors had approved a 2-for-1 stock split of its common stock.  
The shareholder record date will be April 8th, 2002.

The effective date of the split will be April 24th, 2002 and post-
split the company will have almost 89 million shares outstanding.

Chart readers will noticed the huge gap up in December when the 
company announced it would merge with Suiza Foods (SZA).  

The stock closed at $70.10 on Thursday.  For a current quote,
click here:
http://user.financialcontent.com/pin1/quote.cgi?account=pin1&ticker=DF


About the company
Dean Foods Company is one of the nation's leading food and 
beverage companies. The company produces a full line of company-
branded and private label dairy products such as milk and milk-
based beverages, ice cream, coffee creamers, half and half, 
whipping cream, whipped toppings, sour cream, cottage cheese, 
yogurt, dips, dressing and soy milk. The company is also a leading 
supplier of pickles and other specialty food products, juice, 
juice drinks and water. The company operates over 120 plants in 39 
states and 3 countries, and employees more than 30,000 people. 
(source: company press release)


---

PMI Group Declares 2-for-1 Split.

Yet another company to announce a stock split after the close 
today is the PMI Group, Inc. (NYSE:PMI).  This private mortgage 
insurer announced that their Board of Directors had approved a 2-
for-1 stock split in the form of a 100% stock dividend.

They also approved an increase in authorized shares and an 
increase in the cash dividend from $0.08 to $0.10 on a post-split 
basis.  All of these are subject to shareholder approval of the 
increase in authorized shares.

The shareholder record date was not disclosed and will probably be 
decided at the May 16th, 2002 shareholder annual meeting.

The stock closed at $69.91 on Thursday.  For a current quote,
click here:
http://user.financialcontent.com/pin1/quote.cgi?account=pin1&ticker=PMI


About the company
The PMI Group, Inc. is headquartered in San Francisco and is one 
of the largest private mortgage insurers in the world. The PMI 
Group, Inc., through its subsidiaries, provides private mortgage 
insurance in the United States, Australia, New Zealand and Europe, 
and mortgage guaranty reinsurance in Hong Kong. The PMI Group, 
Inc. is a leader in mortgage risk management technology providing 
various products and services for the home mortgage finance 
industry, as well as title insurance. (source: company press 
release)

---

WellPoint Offers Investors 2-for-1 Split

After the market close this evening, WellPoint Health Networks 
Inc. (NYSE:WLP) announced that their Board of Directors had 
approved a long-expected 2-for-1 stock split.  The split will take 
affect as a stock dividend for shareholders on record as of March 
5th, 2002.

The payable date for the split will be March 14th, with an 
effective date or distribute date of March 15th.  After the split, 
WLP will have approximately 127.6 million shares outstanding.

The stock closed at $126.06 on Wednesday.  For a current quote,
click here:
http://user.financialcontent.com/pin1/quote.cgi?account=pin1&ticker=WLP


About the company
WellPoint Health Networks Inc. serves the health care needs of 
more than 12 million members and approximately 45 million 
specialty members nationwide through Blue Cross of California, 
Blue Cross and Blue Shield of Georgia, Blue Cross and Blue Shield 
of Missouri, HealthLink and UNICARE. WellPoint offers a broad 
spectrum of quality network-based health products including open 
access PPO, POS and hybrid products, HMO and specialty products. 
Specialty products include pharmacy benefit management, dental, 
utilization management, vision, mental health, life and disability 
insurance, long term care insurance, flexible spending accounts, 
COBRA administration, and Medicare supplements. 
(company press release)


---

Elmer's Serves Up Earnings & Split.

Another company to announce a split after the close today was 
Elmer's Restaurants, Inc. (Nasdaq:ELMS).  The company also 
announced their Q3 earnings with revenues improving from $5.8M the 
quarter a year earlier to $7.9M.  The stock is not actively traded 
and as extremely low daily volume.  Currently the company has less 
than 2 million shares outstanding.

The split is a 21-for-20 or 5% common stock dividend for 
shareholder of record on March 7th, 2002.  The payable date will 
be on or about March 21st, 2002.

The stock closed at $5.00 on Thursday.  For a current quote,
click here:
http://user.financialcontent.com/pin1/quote.cgi?account=pin1&ticker=ELMS


About the company
The Company owns and operates 12 Elmer's restaurants and 
franchises 19 in Washington, Oregon, California, Alaska, Idaho, 
and Montana. The Company also owns and operates five Mitzel's 
American Kitchen restaurants in Puget Sound Washington, and ten 
delicatessen-style restaurants in Oregon. The Company also 
announced that a new Elmer's restaurant is scheduled to open in 
April in Nampa, Idaho, which represents the fourth new Elmer's 
restaurant opening in approximately 15 months. (source: company 
press release)

---


York Water Co. Announces Earnings & Split

The York County, Pennsylvania-based York Water Company announced 
both its earnings and a 2-for-1 stock split.

The company didn't offer any split date information because it is 
subject to approval by the Pennsylvania Public Utility Commission.  
They did not offer any date on when the PPUC would meet on the 
subject.

The company has an incredibly small amount of shares outstanding 
of approximately 3 million shares so the split will help increase 
liquidity but we would still avoid the stock due to lack of 
average daily volume.

The stock closed at $26.37 on Wednesday.  For a current quote,
click here:
http://user.financialcontent.com/pin1/quote.cgi?account=pin1&ticker=YORW


About the company
York County-specific Water Company purifies and distributes water 
to an estimated population of just 146,000.  




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

RJR     RJ Reynolds Tobacco        64.27     +0.52
MYG     Maytag Corp                33.35     +0.61
ZQK     Quiksilver Inc             19.80     +0.80
KCP     Kenneth Cole Productions   18.80     +0.62

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

TEX     Terex Corp                 16.72     +1.13
BSTE    Biosite Inc                19.93     +2.03

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

HCA     HCA Inc                    43.75     +1.29
DHR     Danaher Corp               67.45     +1.85
TXT     Textron Inc                45.55     +2.01
BVF     Biovail Corp               48.00     +3.94
DVN     Devon Energy Corp          41.20     +1.46
AHC     Amerada Hess Corp          66.63     +1.08

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

INTC    Intel Corp                 29.48     -1.96
BLS     Bellsouth Corp             37.95     -2.50
AOL     AOL Time Warner            23.00     -1.20
QCOM    QUALCOMM                   32.50     -3.41
NWS     The News Corp ltd          25.01     -1.73

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

DOL     Dole Food Co               28.71     -0.90
HTHR    Hawthorne Financial        23.00     -1.10



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