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Daily Newsletter, Friday, 02/22/2002

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PremierInvestor.net Newsletter          Weekend Edition 02-22-2002
                                                    section 1 of 3
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In section one:

Market Wrap:      Dow's late rally good enough for a weekly gain
Play-of-the-Day:  Drilling For Profits
Watch List:       Drugs, Auto Parts, Oil & Much More!
Market Sentiment: An hour of excitement

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U.S. Market Numbers
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MARKET WRAP  (view in courier font for table alignment)
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        WE 2-22          WE 2-15           WE 2-8           WE 2-1
DOW     9968.15 + 65.11  9903.04 +158.80  9744.24 -163.02  + 67.18 
Nasdaq  1724.54 - 80.66  1805.20 - 13.68  1818.88 - 92.36  - 26.46 
S&P-100  554.04 -  5.61   559.65 +  2.37   557.28 - 12.07  -  5.79 
S&P-500 1089.84 - 14.34  1104.18 +  7.96  1096.22 - 25.98  - 11.08 
W5000  10179.29 -136.19 10315.48 + 66.16 10249.32 -240.85  - 86.35 
RUT      465.07 -  4.18   469.25 +  2.58   466.67 - 13.37  +   .69 
TRAN    2725.65 + 41.42  2684.23 + 24.29  2659.94 - 99.39  - 20.59 
VIX       24.89 +   .80    24.09 -  1.38    25.47 +  2.60  +   .94 
VXN       48.57 +  3.58    44.99 -  4.29    49.28 +  6.20  -  2.59 
TRIN       1.33             1.89              .64             1.44 
TICK      +1044             -128             +957             +652  
Put/Call    .94              .90              .73              .67   
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WE= week ended

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

Dow's late rally good enough for a weekly gain

The last two hours of trading in recent sessions has been where 
most of the action seems to take place and today was little 
different.  On a day where most stocks looked to be edging lower, 
there was just enough bullishness in some of the old boring 
cyclicals to push the broader market averages into the green by 
session's end.

The most widely quoted market average in the world in the Dow 
Jones Industrials (INDU) traded in the green for the bulk of the 
session and added 133 points to 9,968 late in the day to squeak 
out a 65 point gain for the week and that leadership helped pull 
the tech-heavy NASDAQ Composite (COMPX) out of its daily slump 
with an 8 point gain, but not nearly enough to repair a -4.5% 
weekly decline.  The S&P 500 (SPX.X) also benefited from some of 
the bullishness brought on by the Dow's performance as it managed 
to claw its way back above the 1,085 level to close with an 
8-point gain (+0.82%) to 1,089.

This weeks trading once again found technology bulls on the 
losing end of things as many of the technology-related sectors we 
follow found losses that exceeded 4.5%.  Hardest hit this week 
were Fiber Optic (FOP.X) -9.2%, Software (GSO.X) -9.0% and 
Semiconductors (SOX.X) -8.1%.

This week's action wasn't entirely bearish.  Some of the more 
"defensive" areas and sectors that would most likely benefit from 
an economic recovery showed some gains.  The energy sectors did 
well again for the second week in a row as the Oil Service Index 
(OSX.X) lead sector winners with a 4.6% weekly gain, with 2.15% 
coming in today's session.  The Natural Gas Index (XNG.X) edged 
higher with a 2.6% weekly gain, while the Oil Index (OIX.X) edged 
up 1.3% on the week.

In recent months we've commented on what role the energy stocks 
might play as it relates to the MARKET tipping its hand at 
economic recovery.  It's worth noting that the Oil Index (OIX.X) 
is now unchanged on the year, while the Oil Service Index (OSX.X) 
is now showing a 3.2% gain for 2002.  Those stocks that derive 
the bulk of their revenues from natural gas, as depicted by the 
Natural Gas Index (XNG.X) are still showing an 8.7% year-to-date 
decline.  

There is an interesting report in the "Media Center" section of 
the American Petroleum Institute we site http://api-
ec.api.org/intro/index_noflash.htm dated February 13th that 
mentions U.S. production rebounded for the month of January by 3% 
compared to January 2001.  Alaska production of 1.032 million 
barrels per day was 5.3% higher than a year ago.  What this has 
done is lowered the US's dependency on foreign oil to the 57.3% 
level from 60.7% in January of last year.

I'm left to speculate of why this may be happening.  Is domestic 
output on the rise due to Middle-east tensions and a U.S. 
Government strategy to get some production gains going just in 
case there is some type of future event that has foreign imports 
cut off.  Or is it simply President Bush's initiative to have the 
U.S. less dependent on foreign sources of energy?  I'm not sure.  
On Thursday, there was "market rumor" during a round of selling 
that the U.S. had troops in Iraq.  That rumor was squashed by the 
Pentagon, but it does make one wonder perhaps why production 
increases are being seen on the domestic front.  Maybe its just 
in advance of a stronger economy.

The production increases certainly aren't coming from the demand 
side of things.  The report goes on to mention that demand, as 
measured by how much refined product was delivered to the 
industry's marketplace, continued to be weak with 18.83 million 
barrels per day distributed from refineries, storage terminals 
and imports, which was a 5.4% decline compared to a year earlier.

If you want more statistics (some of them quite interesting) you 
may want to read that report.  Here's one last number that seems 
pretty interesting.  Kerosine jet fuel deliveries were up by 
60,000 barrels per day from December, but still resulted in a 
9.5% decline from a year ago.  The report also mentions various 
inventory levels of different products.  All totaled, inventories 
from the report showed gains, with Kerosine jet fuels showing a 
decline of 7.9% at 40.1 million barrels in inventory.

Weekly market averages/sector performance




Jet fuel draw downs and increase production.  Hey! Those airline 
stocks as a group (Airline Index (XAL.X)) are showing a gain of 
11.4% since December 28, 2001.  What the heck is that?  The Dow 
Transportation Average (TRAN) is also showing a decent gain of 
3.1% year-to-date.  Is it economic growth, or just a dead cat 
bounce?  I'm still thinking economic growth.

We've mentioned for some time that we didn't think that the 
technology stocks were the place for bulls to focus on prospects 
of economic growth.  Instead, bulls should focus more in the area 
of the deeper cyclicals.  Airlines, Transportation, Oil, Natural 
Gas, Forest/Paper, Chemical, Heavy Machinery and those types of 
sectors are areas that young bulls looking for economic growth 
should be looking for strength.  While gains/losses from December 
28th (far right column from above) are by no means indicative of 
what the future holds, those right column should stick out as to 
where a young bull should focus.

Yes, there will be periods when the tech stocks rally and there's 
some good trading to be had, but if your trying to build back an 
account and have been trading tech stocks in recent weeks from 
the bullish side, odds are you're having some trouble.  I have 
heard a couple of "analysts" say that the next economic boom will 
come from technology.  If that's the case, then some of those 
"new economy" guys need to change their tune about an economic 
recovery.  I just don't see the technology market pulling the 
U.S. out of economic slowing.  The pocketbooks reside at the 
deeper cyclicals.  Those are the ones with the IT budgets that 
spend on technology.

If you look where I've placed the green arrow and the red arrows, 
try telling anyone that hopes of economic recovery or bullishness 
is going to come from the technology space.  Last week the 
Semiconductor Index (SOX.X) showed a 3% gain year-to-date and 
that got wiped clean this week.  

There were some analyst downgrades in the sector late this week 
on "visibility concerns," but what I think happened was that some 
tech bulls holding some of their loved telecom and networking 
stocks that are now down about 25% on the year, looked at some of 
their semiconductor gains and pressed the sell button.

How fortuitous was last week's mention and bearish play in PMC-
Sierra (PMCS) $16.00 -5.49%.  We've mentioned this one several 
times in our market wrap beginning near the $24 level.  Last 
weekend our play writer's couldn't resist that tasty bearish 
triangle from the point/figure chart and breaking of a sizeable 
wedge.  

PMC Sierra Chart - Daily Interval




PMCS got crushed from last Friday's close of $20.71 to today's 
close of $16.00 for a nice bearish gain of 22%.  From here, the 
trade becomes pretty easy to manage.  The first level we thought 
might find some market maker support has been cleared at $18.89 
and today's 5.49% decline came in the face of a late NASDAQ 
rebound.  You get the feeling there's no bullish interest in this 
one.  If we look back to August/September of last year, all we 
have to do now is follow with a stop just above the previous 
day's high and let the stock tell us when to cover.  Read 
tonight's play update, as we'll want to move our stop lower to 
reduce risk in the trade.

Hopefully you and I are on the same page as far as some of this 
"technology stock" stuff goes.  There's going to be rallies and 
you and I both know it.  But.... look at the weekly losses for 
many of those indexes we follow and see if you're willing to step 
in front of the southbound train.  I'm not.

Don't fret tech bulls!  Your day will come again so be patient.  
I'm noting that the Biotech Index (BTK.X) fell -2.6% this week.  
While I hate losses, this is the group that "techies" should be 
keeping an eye on for some bullishness.  If it's going to happen 
then we've got some exposure in our play list with the Biotech 
HOLDRS (AMEX:BBH) $117.85 +0.38%.  Our thinking for bullishness 
is based off of several things.  The technicals are holding 
together and we don't feel this group will be as "economically" 
sensitive and other portions of technology.  Even if you initiate 
some bullish trades in some computer-related technology stocks 
during a short-term bullish phase, keep monitoring the biotechs.

What I'd be looking for is some type of bullishness to be 
presenting itself in the group.  What I think helps determine a 
"short covering rally" from a true bullish rally is that a group 
you've identified as trading more bullish during a decline, 
should show bullishness if the broader markets show gains.  

It's so tough to put a time limit on things.  For instance, I 
think we're in the last leg down of the recent decline for 
technology stocks right now.  As I pointed out last night, some 
heads are turning and it's the selling in some of the technology 
stocks like Cognos (NASDAQ:COGN) $24.99 +1.62% and Storage 
Technology (NASDAQ:STK) $18.10 -7.08% of late that indicates to 
me that some of the winners are finally being sold.  The strong 
are usually the last to fall, especially when they are associated 
with a sector that is under pressure.

I'm trying to draw off of observations made in September and 
October where the biotechs showed relative strength gains versus 
broader technology during their climactic selling.  What we saw 
then was a biotech firming and then the move higher from the 
biotechs that seemed to help spark the recovery in the 
semiconductors and then broader technology.

Hopefully you don't think I'm trying to "imagine" these things.  
If I look at the weekly numbers, I see the Biotech Index (BTK.X) 
was down -2.6% this week, while other technology sectors saw 
bigger gains.

Both ends of the snake

While I may classify the biotechs as being the stronger group for 
technology bulls to be monitoring right now, lets not forget 
about our "inchworm" or "snake" analogies where we want to be 
monitoring some of he weaker stocks for strength.

Let's face it.  Telecom is probably the weakest area of the 
market.  Our subscribers that shorted Time Warner Telecom 
(NASDAQ:TWTC) $7.00 +7.69% closed out their bearish trade with a 
handsome gain at $7.08 on Tuesday.  Here we are on Friday and the 
stock is trading right near our profiled drop price.  This is a 
rather short-term type of observations, but the "tail" looks to 
be trying to anchor itself or at least firm up.

Even Qwest Communications (NYSE:Q) $8.27 -1.89% showed a weekly 
gain of 9% this week.  A 9% gain from a company that wasn't able 
to sell short-term notes in the market and had to access it bank 
credit facility.  I have no bullish thoughts on Qwest (Q).  All I 
want to do is monitor some of these stocks for signs of stability 
at the lower end of the inchworm to give hint the sellers are 
drying up.

It's my thought that if the MARKET stops selling some of the weak 
ones, they will most likely stop selling the strong stocks.  When 
that happens is when the buying from bulls really will show 
through and a stronger rally takes hold.

Speaking of strong stocks

Last weak I put a checkmark in our Dow portfolio's by shares of 
United Technologies (NYSE:UTX) $69.70 +0.79% and Honeywell 
(NYSE:HON) $35.09 +3.05%.  Both stocks managed to show some gains 
this week with UTX edging up 0.62% and HON trading up 4.3% for 
the week.  

I wish I could tell you I was "well connected" and knew of 
today's bear hug by Northrop (NYSE:NOC) and announcement it wants 
to buy fellow defense company TRW Inc. (NYSE:TRW) $50.30 +26.38% 
for $47 per share.  The reason that TRW closed at $50.30 per 
share is that the offer was somewhat shunned by TRW as the 
company felt that NOC was trying to buy the company on the cheap 
and that the $47 offer may have to be sweetened for TRW to 
consider such a merger.  

This revelation of merger activity in the defense sector actually 
helped subscribers that took our bullish play in fellow defense 
stock Rockwell Collins (NYSE:COL) $23 +4.35%.  

Rockwell Collins Chart - Daily Interval




Our bullish play in defense manufacturer is a bit of a sector 
play on what we observed last Friday as bullishness building in 
the defense stocks.  We'll take all the rumor and speculation of 
consolidation in the defense sector the market will give us in 
this one, but the technicals were just too bullish to not give 
the stock and the sector a look.  I really like the way the stock 
seems to peg the levels of retracement and it looks like the 
institutions are working the stock with a buy side bias.  I like 
the two volume spike in January and that to me hints of an 
institution taking some stock and building a chart.  Today's 
close above the 61.8% retracement of $22.53 and MACD crossing 
above the signal should now have some momentum players taking a 
look at the stock.  If we can get a sustained move above the 
$23.10 level then the last technical hurdle is $23.88, which was 
the all-time high for the stock when it was originally listed on 
the NYSE.

One thing I personally like about this stock is that it is a "new 
issue."  A long time ago, a senior trader taught me this pattern.  
It can be powerful and is based off the simple belief that, those 
that got the stock in the Initial Public Offering (IPO) or in 
COL's case spin-off and most likely own the stock at a 
ridiculously low level and they're the ones that are actually 
selling some of their shares to create the IPO.  I was taught a 
technical analysis pattern called "the new issue breakout."  What 
can happen is that soon after the offering is traded, there is 
further selling immediately following in the open market and the 
stock begins to trade lower.  Institutions that are "believers" 
in the longer-term will let the stock pull back and then begin 
accumulating positions.  At the same time, you've got bears 
coming in and shorting the stock with the belief that the new 
issue lacks "sponsorship" as only those institutions that wanted 
it in the first place already got theirs in the IPO.

Where the bullishness can come from is when the new issue exceeds 
its first day of trading high.  At that point, the thought is 
"there isn't a share that's owned any higher than this and that 
means there's no overhead supply in the way."  This break higher 
can also have institutions that have been accumulating the stock 
really starting to hammer at the offer and get the stock going to 
bring in momentum players.  The gains can be impressive.

Now, this is more educational than anything, but it is something 
to think about if you're a supply/demand believer like me and 
something to think about as it relates to the potential 
opportunity at hand with COL.

Here's a chart of an Internet stock that I traded for clients 
back in December of 1998.  We knew nothing about the company for 
the most part, but it was an Internet stock and it was setting up 
the "new issue breakout" pattern.  What happened surprised even 
me.  It's a trade I'll never forget.

uBid Chart - Daily Interval




Now, Rockwell Collins (COL) isn't an Internet stock, but it is a 
new issue that looks like it may be on its way to breaking to a 
relative high.  During the hay days of the Internet bubble, some 
of my more aggressive clients would take a portion of their 
account and play some Internet stocks based on the "new issue 
breakout."  For short-term traders, speculation and 52-week highs 
can become the ingredient for some pretty good trades.

There's no thought in my mind that a break to a new 52-week high 
in our bullish play for Rockwell Collins (COL) is going to have 
the stock doubling in three days like uBid did back in 1998 from 
the break at $60.50, but a "pop" to the upper end of retracement 
near $27-$28 isn't out of the question.  Especially if there's 
some "speculation" that there may be some consolidation and 
potential mergers in the defense sector.

I will note that Rockwell Collins (COL) trade profile was not 
picked based on "speculation" of merger activity.  It was based 
purely on technical bullishness that correlated with some things 
we were seeing in fellow Dow components United Technologies (UTX) 
and Honeywell (HON) from last week.

Next week

We're starting to see some volatility come into the markets this 
week and this is a sign of disagreement.  The turns up and down 
are getting a little more frequent and what we want subscribers 
to do is to protect some of the bearish gains they may have in 
some stocks.

Try to put things in perspective about the bullish triangles we 
pointed out from weeks ago in Celestica (NYSE:CLS), PMC Sierra 
(NYSE:PMCS), Altera (NYSE:ALTR) and others.  While we often quote 
Professor Davis' study of how powerful and profitable those 
bearish triangles can be for a bearish trader, we don't 
necessarily want to see 10-15% gains that have come in a short 
period of time, simply go "poof" due to a short-covering rally.

The reason we're getting some volatility isn't because bears have 
a firm belief that the economy is going in the tank.  200-point 
swings in the Dow don't just happen.  Bulls and bears trying to 
make each other pay for their complacency and greed.

I think it is true that bulls are struggling with some firming 
economic data, but troubled by continued news of some accounting 
concern or investigation into accounting practices.

I think it is also true that bears are struggling with the same 
issues.

I can't speak for you, but for me, I am struggling with these 
same issues.  I can't just sit back and do nothing.  I want to 
make money, for you and for myself.  The way I think we continue 
to do it is to stay bullish on some stodgy stocks like we have 
been doing where the technicals hint that bulls are present and 
bears are void.  Then, from time to time, add a little spice with 
the biotechs as their relative strength improves and we can 
control our downside risk with a tight stop.

To satisfy my bearish tendencies, I want to try and play the 
probabilities that present themselves in the point and figure 
charts.  The reason the "bearish triangle" works so well in my 
mind is that the "wedge" that is creating builds the pressure for 
some type of short-term capitulation by those that were buying on 
the belief of good fundamentals, but in the backs of their minds, 
the bulls were thinking that the weakness unfolding on the break 
of the triangle must be a sign that some type of bad news is 
about to present itself, so they cave in and the selling has the 
stock heading south.

Our trading discipline and technical analysis has worked very 
well in my opinion, but you and I can't get comfortable with the 
gains found from closed positions and be complacent with those 
still open.

As I look back on things, it was almost "easier" to trade the 
market immediately after the terrorist attacks than it is today.  
In the latter part of last year, the economy was slow and 
investor psychology was in the tank.

Today we've got this accounting concern, which I really don't 
know that anyone has a handle on.  I've said before that I used 
to be a "fundamentals" investor.  I'd crunch numbers on 
spreadsheets until the late hours of the night to find those 
stocks with growing gross margins, accelerating revenues and 
earnings and buy those stocks.  Those that lacked the 
fundamentals I deemed as important were short candidates.  
Eventually I came to understand that there was usually somebody 
smarter or somebody that knew the "real story" before I did and 
the move was already over by the time it showed up in the 
fundamentals.

Perhaps today's accounting issues shouldn't impact the technical 
trader like I've become, but what this accounting issue has done 
is it has placed an emphasis on just how psychological the market 
is right now.

I will confess a weakness here.  I can pose some psychological 
scenarios that look to be in play in certain sectors or stocks by 
the technicals that I find, but I can't say for fact that a 
certain type of psyche is indeed present.  The mental game that 
comes into play is what takes place in the technicals.  We can 
use breakouts to the upside to our advantage, but there has to be 
some type of measurable upside that has seller either void in the 
stock, or looking to cover their short positions as they're just 
as uncertain that they may be on the wrong side of things due to 
some economic data that shows strengthening.

Conversely, we can use a bull's psychology against them too.  
Stocks that reside in groups where we've seen some type of 
accounting concerns raised or even poor fundamentals that are 
breaking down and have some good downside to support levels will 
have bulls thinking "oh no, here we go again, so I'm getting 
out."

All sum, it really goes back to what we try and teach or talk 
about on a consistent basis.  Trade bullish in strong stocks in 
strong sectors and you will most likely find success.  
Institutional bears don't short strong stocks in strong sectors 
unless they have some type of knowledge that something bad is 
about to happen.  If I've got my stop placed properly at a level 
just below technical support, then my thinking is the stock 
shouldn't get stopped out unless I'm wrong.  If I'm wrong, then I 
need to move to the sidelines and figure out where I was wrong.

Yes, there will be times that the stop was set a little too 
tight.  The other night I looked at a bearish play we had 
profiled in shares of Pharmaceutical Resources (NYSE:PRX) at 
$27.30 back on January 12th.  We were stopped for an 8.1% loss on 
January 17th at $29.51.  Today the stock trades $16.70 and boy 
wouldn't I like to have that one back.

We know too well though that had we not used a stop and stuck 
with it, that silly bugger would have run to $40 and we wouldn't 
have been able to take a trade in Time Warner Telecom (TWTC) or 
Celestica (CLS) or even PMC Sierra (PMCS) or any other bearish 
play because we blew ourselves up in the last trade.

It is so encouraging for me to get e-mail from subscribers saying 
that they sold profits too soon, or bought profits back in a 
short position a little too early.  All that matters is that 
you're making a profit that you find satisfactory and that meets 
you investment/trade goal.

The traders/investors that get blown up in the stock market are 
the ones that don't have profit targets or stop losses on their 
trades.

Long winded

I start "rambling" about trading discipline, but it is so 
important.  Let's take a quick look at what lies ahead.

The economic calendar is going to be full and the market is going 
to be bombarded with economic data.  Existing home sales, 
consumer confidence, durable goods orders, new home sales, gross 
domestic product, jobless claims, Chicago PMI, personal 
income/spending, ISM, construction spending, consumer sentiment 
and domestic vehicle sales.

Wow!  That's a lot to chew on.  The recent economic data that has 
been released in the past couple of weeks has actually had many 
economists beginning to predict a stronger rebound than many had 
expected a few months ago.

Fed Chairman Alan Greenspan will deliver his semiannual testimony 
to Congress on Wednesday.  Many Fed watchers believe Mr. 
Greenspan will continue to advise caution toward economic 
recovery, but economic data released on Monday (existing home 
sales and consumer confidence) and Tuesday's (durable goods 
orders and new home sales) and Wednesday morning's (GDP, jobless 
claims and Chicago PMI) would impact Mr. Greenspan's comments on 
his outlook for the economy.

Mr. Greenspan likes to talk to the nation's business leaders 
about how things are going for business, but the recent Enron 
debacle has many business executives painting the canvas rather 
bleak.  Many business executives feel it is now better to be 
pessimistic/conservative, so they won't get accused of misleading 
investors at a later date if things don't pan out.  

Some feel that these conversations with business leaders will 
have Greenspan issuing words of caution.  While Greenspan loves 
to plow through economic numbers, he also trusts business leaders 
and listens to what they have to say.

Mr. Greenspan isn't a dummy.  Like you and I, he will listen to 
what others have to say and weigh that against the hard numbers.  
If the economic data early in the week shows some upside 
surprises, then I expect his testimony will mimic the economic 
numbers.

Have a great weekend and get plenty of rest!  Next week is going 
to be busy!

Jeff Bailey
Senior Market Technician


=========================
Play-of-the-Day (Bullish)
=========================
(( this is a new non-tech play for the weekend ))

Apache Corp - APA - close: 51.57 change: +0.17 stop: 48.99

Company Description:
Apache Corporation is a large oil and gas independent with 
operations in the United States, Canada, Egypt, Western 
Australia, Poland, China and Argentina. (source: company press 
release)

Why We Like It:
We suspect that the recent uptrend in the oil and oil service 
stocks is just the beginning of a larger move.  We saw several 
really attractive stocks that looked great for potential long 
plays and it was a real challenge to pick just one to play this 
weekend.  The two we liked the most were APA, more of an oil 
producer and SLB, more of an oil service stock.  The OSX.X oil 
service index has already had a decent week so the OIX.X oil 
index could be right behind it.  However, both charts of APA and 
SLB look similar.  Actually, I preferred SLB but we chose to put 
it on the watch list.  We picked APA because it was an oil 
producer and its relative strength versus SLB was stronger.  
Besides, the price of oil appears to be building a bullish 
pattern on its own and is currently trading around $21 a barrel.  
It has resistance at $22 but might be able to break over it if 
the economy does continue rebounding and we do see military 
action against Iraq.  Short-term we would look for a move up to 
the $54 to $55 level.  This should be possible with shares rising 
on growing volume lately.  However, if the stock can breakout 
above $54/$55 then it would be a break of the neckline of its 
reverse head-and-shoulders.  This pattern on APA just happens to 
have two right shoulders which is not uncommon.  This would 
indeed be a powerful move.  Bulls can take comfort in the point-
and-figure chart as well since the stock has rebounded strongly 
off its bullish support line recently and produced a double-top 
breakout.  We're going to start the play with a stop at $48.99, 
which is 5% from its current share price.

Picked on February 22nd at $51.57 
Change since picked:        +0.00
Earnings Date            01/31/02 (confirmed)






==================================================================
WATCH LIST
==================================================================

The PremierInvestor.net watch list is not designed to be read
as full fledged stock picks.  Rather we would prefer to offer
it as an extra tool in today's investor toolbox.  Think of it
as a radar screen with your own radar operator pointing out
interesting developments, technical patterns or potential plays
that you may or may not have seen on your own.  Due to time
constraints we do glance at the news but rarely do we have 
time to fully read pertinent news stories, due background 
research and other necessary screens that investors should do
before making a decision.  A common exercise is to read the
entry, glance at the sector and other stocks in that industry
and then compare what's happening in the stock to what's 
happening in the broader market indices.  We hope you enjoy
the Watch List and that it proves to be a useful tool for your
own trading success.

STOCKS WORTH WATCHING
---------------------------------

BULLISH CANDIDATES
------------------

DRUGS.  The DRG.X has been relatively strong lately and may have 
reversed out of its recent bearish trend.  The move on Friday was 
very positive but we still see overhead resistance at the 390 
level.  However, there are a couple of drug stocks we like and are 
worth watching.


Johnson and Johnson - JNJ - close: 59.40 change: +1.40

WHAT TO WATCH: JNJ added 2.4% on Friday and broke above the $59 
level which had been resistance for it over the last week.  The 
$60 level is a tougher hurdle for shares to overcome but if JNJ 
can breakthrough then we'd consider a bullish play on it.  This 
may take a few days to accomplish as shares slowly build up a 
series of higher lows before finally breaking out or it could just 
power through it if investors flee to the drug sector.




---

Abbot Laboratories - ABT - close: 57.61 change: +0.46

WHAT TO WATCH: Shares of ABT have been in a long-term major up 
trend for months with buyers stepping in at the 50 or 100-dma 
since October.  This time the stock is poised to breakout above 
the $58 resistance level that has thwarted its advance since mid-
January.  We'd look for that breakout as a potential trigger event 
to evaluate a bullish play on ABT.




---

St. Jude Medical - STJ - close: 81.13 change: +1.53

WHAT TO WATCH: STJ is not a drug stock but still in the healthcare 
sector which is also seen as a defensive haven during tough 
markets.  This is another equity that has been in a long-trending 
climb which has recently broken out above significant resistance 
at the $80 level.  The move came on strong volume of 1.19 million 
shares complimented by a bullish crossover in the MACD.  We'd 
consider a bullish play in STJ now with a stop under the $76 
level.  However, traders can watch for a pullback to $80 as a 
slightly better entry point.







AUTO PARTS & SERVICE.  We've noticed that a number of auto parts 
stocks and related companies appear to be drawing investor 
interest and several have some very bullish chart patterns that 
traders will want to watch for potential trades.


Arvinmeritor Inc - ARM - close: 27.00 change: +1.06

WHAT TO WATCH: Shares of this auto parts producer added another 4% 
on Friday and honestly the stock looks pretty overbought.  
However, the stock has been very strong and most of the advances 
are coming on heavy volume, which would indicate institutional 
buying.  We're not suggesting you go long on the stock today but 
waiting for an appropriate pull back may be a good plan to catch 
the next move up.  The $30 level might be round-number price 
resistance and a signal for investors to take profits.  Be 
careful.  




---

Borg Warner Inc - BWA - close: 58.85 change: +0.93

WHAT TO WATCH: BWA is another auto parts company who's stock has 
been incredibly strong the last several months.  The last month 
has seen BWA breakout above significant resistance at $55 and 
barely pause to stop and consolidate.  Shares are definitely 
overbought but as long as the trend continues why fight it.  
Definitely one where you need to follow up on stop loss placement.  
The $60 level could be resistance so waiting for a possible pull 
back to $55 might be a good plan (if it occurs).




---

Autozone Inc - AZO - close: 70.01 change: +1.11

WHAT TO WATCH: The auto parts retailer has turned in an amazing 
twelve months for investors and after peaking at the $80 level 
pulled back to consolidate near $65.  It now appears that the 
consolidation is over and the stock is beginning to trade higher 
again on rising volume.  We're not suggesting a play in the stock 
right now as AZO is expected to announce earnings on Feb. 26th.  
If Wall Street's reaction to the earnings is favorable then we 
might look for an entry on an attractive pull back.  Otherwise, 
investors might use the earnings as an excuse to take profits 
which has been a very common occurrence lately.  





OIL & OIL SERVICE.  The oil and oil service sectors look very 
attractive right now and we've seen a number of stocks that could 
be great plays for both active and patient investors.  We did 
choose one stock to play in the newsletter this weekend and that 
was APA.  


Schlumberger Ltd. - SLB - close: 57.35 change: +1.91

WHAT TO WATCH: SLB was our second choice for a potential oil-stock 
play but in the end Apache won out.  This doesn't mean that SLB 
isn't a great play candidate and it could be a winner for traders 
next week.  We like it for both its bullish point-and-figure chart 
and its bullish breakout on the daily chart.  The stock has broken 
out above long-time resistance at $57 on strong volume.  Look for 
confirmation and use a stop.




---

Anadarko Petroleum - APC - close: 50.61 change: +1.19

WHAT TO WATCH: This is another oil stock that has broken out above 
heavy resistance on increasing volume and looks like it could 
trade to its 200-dma near $55.




---

Devon Energy - DVN - close: 42.38 change: +1.18

WHAT TO WATCH: Yet another oil stock that has broken out above 
resistance on strong volume and looks to be starting a multi-
session leg higher.  However, traders need to watch out for the 
200-dma at $44 as potential resistance.





MORE BULLISH CANDIDATES
-----------------------

ITW  - We highlighted ITW on last weekend's watch list for a break
       over the $72.50 level.  It has done so on extremely strong
       volume and looks very bullish.  A pull back to $72.00 or 
       $72.50 might be a good entry point.

PH   - This is another manufacturing company that has been making 
       gains on rising volume.  Friday's move put it above the $50
       resistance level on extremely heavy volume.  It looks like 
       a possible play.

ROH  - Nothing like playing cyclicals when the techs are down.
       This chemical maker has been relatively strong the last 
       week and Thursday and Friday put it above resistance of $38
       on strong volume.  Could be worth your attention.

YUM  - Several stocks in the restaurant group look very attractive
       for possible bullish plays and Tricon is one of them.  
       Friday produced a bullish candlestick pattern and a new 
       closing high.

DRI  - Not to be out done, Darden also looks very bullish but we'd
       probably wait for a pull back before considering a long 
       position in this stock.  A bounce at $40 might be an entry.


MORE BEARISH CANDIDATES
-----------------------

MONE - The recent breakdown under the 200-dma and the subsequent 
       breakdown under the $12 level has this stock looking very
       bearish.  We would consider a trigger under $10 to capture 
       a move to its next support at $8.00.

HWP  - Concerns over lagging PC sales and other hardware, plus
       more uneasiness about its merger with CPQ have pushed HWP
       under the $20 level.  A move under $19 could produce a 
       follow through move to $16.75.

FDC  - First Data has broken a long-term up trend and failed to 
       rebound over the $80 level of support.  Another failed 
       rally may be a good shorting opportunity with a target near
       its 200-dma at $70.

NOK  - The telecom and wireless sectors have been under heavy 
       selling pressure for months.  NOK's drop under the $20 
       level is very foreboding and we could see a retest of $15.



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

An hour of excitement
by Russ Moore

The week ended with another late day flurry, this time to the 
upside. Volatile swings are becoming commonplace of late, putting 
the longer-term investor in a tough position.

The DOW tested both sides of the breakeven line before heading 
north for good in the late going, en-route to a +1.4 percent 
gain. The NASDAQ experienced a more difficult journey but did 
manage to close in the green with a gain of +0.5 percent. The NDX 
added +0.6 percent.

Advancers lead decliners by a margin of 20/12 on the big board 
and 19/16 on the tech index. Volume showed no signs of 
improvement coming in with 1.39 billion shares on the NYSE and 
1.82 billion on the NASDAQ.

Brokerages, banks, retail, gold and airlines were the weak spots 
on the broad markets while oil and oil service sectors were the 
top performers. Over on the tech side, software was off slightly 
while all remaining sectors enjoyed fractional gains.

Taking a look at this week's COT data, we see that the Commercial 
position has barely budged. We keep looking for a shift in 
sentiment from the big players and that just isn't happening. If 
there were a market turnaround coming in the second half of 2002 
we'd expect to see a gradual move into an accumulation phase 
(bullish) over the next couple of months. Failure to do so could 
mean the much-touted recovery may be postponed


VIX
Friday 02/22 close: 24.89


VXN
Friday 02/22 close: 48.57


30-yr Bonds
Friday 02/22 close: 5.34


Total Put/Call Ratio:  .94


Equity Option Put/Call Ratio:  .79


Index Option Put/Call Ratio: 2.23


===

NASDAQ 100 Index (NDX/QQQ)
52-Week High: 103.51
52-Week Low:   28.19
Current close: 33.65

Volume/Open Interest
Maximum calls: 40/128,154
Maximum puts : 37/137,468

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: 554.04

Volume/Open Interest
Maximum calls: 580/5,704
Maximum puts : 520/6,079

Moving Averages
 10 DMA  558
 20 DMA  560
 50 DMA  574
200 DMA  593

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: 1089.84

Volume / Open Interest
Maximum calls: 1100/39,149
Maximum puts : 1150/44,990
Moving Averages
 10 DMA 1100
 20 DMA 1104
 50 DMA 1128
200 DMA 1156

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:  9,968.15

Volume / Open Interest
Maximum Calls: 100/20,267
Maximum Puts    96/38,042

Moving Averages:
 10 DMA  9,875
 20 DMA  9,824
 50 DMA  9,915
200 DMA 10,057

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: 487.32

Volume / Open Interest
Maximum Calls: 520/950
Maximum Puts:  520/932

Moving Averages
 10 DMA 498
 20 DMA 496
 50 DMA 536
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: 508.95

Volume / Open Interest
Maximum Calls: 550/1,543
Maximum Puts:  500/1,068

Moving Averages
 10 DMA 541
 20 DMA 542
 50 DMA 545
200 DMA 548

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: 384.23

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

Moving Averages
 10 DMA 379
 20 DMA 376
 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, 02/22. 
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 
02/05/02     347,583   401,569   (53,986)   (4.3%)
02/12/02     355,276   412,868   (57,592)    6.6%
02/19/02     355,905   772,569   (60,759)    5.5%

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
02/05/02       128,235    64,404    63,831     1.1%
02/12/02       126,730    59,902    66,828     4.7%
02/19/02       130,856    63,311    67,545     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 
02/05/02      32,357    35,405    (3,048)      2.5%
02/12/02      32,712    34,841    (2,129)    (30.1%)
02/19/02      33,871    35,690    (1,819)    (14.6%)

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
02/05/02       10,416     8,173    2,243     58.2%
02/12/02        9,009     7,415    1,594    (29.0%)
02/19/02        9,966     8,073    1,893     18.8%

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 
02/05/02      21,868    12,068    9,800     25.9%
02/12/02      26,811    16,488   10,323      5.3%
02/19/02      29,606    17,953   11,653     12.9%

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
02/05/02       5,764    10,528    (4,764)     24.2%
02/12/02       4,562    10,038    (5,476)     15.0%
02/19/02       4,654    10,431    (5,777)      5.5%

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        +67,545     +66,828        -60,759    -57,592

Total Open
Interest %       (+34.79%)  (+35.81%)      (-7.86%)   (-7.50%)
                 net-long   net-long       net-short  net-short


                     Small Specs             Commercials
DJIA futures     (Current) (Previous)    (Current) (Previous)
Open Interest
Net Value          -5,777     -5,476          +11,653   +10,323
Total Open
interest %       (-38.29%)    (-37.51%)      (+24.50%)  (+23.84)
                 net-short   net-short       net-long    net-long


                     Small Spec              Commercials
NASDAQ 100      (Current) (Previous)    (Current) (Previous)
Open Interest
Net Value         +1,893      +1,594       -1,819    -2,129

Total Open
Interest %        (+10.49%)   (+9.71%)     (-2.61%) (-3.15%)
                 net-long   net-long      net-short  net-short


What COT Data Tells Us
----------------------
Indices:.Commercial and Small Spec positions remain virtually 
unchanged this week.

Gold:.Ditto for the gold market as Commercials continue to hold a 
good supply of net-short contracts. Gold has come off its highs 
but still remains relatively strong. In the past, Commercial 
activity has been reasonably accurate in determining the price 
movement on the precious metal however, this time we're stumped. 

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
02/19 60,054 contracts net-short

Data compiled as of Tuesday 02/19 by the CFTC.




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PremierInvestor.net Newsletter          Weekend Edition 02-22-2002
                                                    section 2 of 3
Copyright  2001, All rights reserved.
Redistribution in any form is strictly prohibited.

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In section two:

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

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

High Risk/Reward
  Bearish Play Updates:  ADLAC

Split Trader
  - none -


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

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

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

Biotech HOLDRs - BBH - close: 117.85 chg: +0.45 stop: 114.00

The overall weakness in the tech sector and the Nasdaq continues 
to dominate our bullish play in the biotech sector.  The group is 
trading closely with the Nasdaq, which doesn't bode well for 
bullish traders.  The Nasdaq continues to drop today but found 
support at the 1700 level that stopped its fall.  Likewise the 
BTK.X biotech index found support near 480 and the BBH found 
support near $115.  The late day rally in the Dow Jones 
Industrials help lead the Nasdaq higher and the biotechs higher 
but the overall pattern remains bearish.  The 10K level will be 
tough resistance for the Dow and if the Dow rolls over then the 
Nasdaq will likely succumb to its current bearish trend which in 
turn will be a drag on the biotechs.  Thus we see no reason to 
initiate new bullish plays in the BBH until it can convincingly 
close above the $120 level.  If you were curious the leaders in 
the biotech basket were BGEN +3.7%, ICOS +2.6%, CHIR +2% and GENZ 
+2%.  Frankly speaking, if the BBH breaks $115, we'd expect it to 
trade to $110.  Jeff disagrees with me and suggests leaving the 
stop at $114.  I would probably cinch mine up to $114.95.

Picked on February 20th at $120.00
Gain since picked:           -2.15
Earnings Date                  N/A





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

Celestica - CLS - close: 32.64 change: -0.43 stop: 34.05 *new*

An early morning rally in CLS failed at the $34 level and the 
stock quickly traded towards $32.  Shares appeared to be headed 
for a sub-$32 close before the afternoon rally in the Dow Jones 
that helped breathe life back into the Nasdaq also lifted shares 
of CLS.  The bad news for the bulls is that the afternoon rally 
fizzled again at the $34 level for CLS and the stock traded lower 
into the weekend.  Volume has been very strong the last few 
sessions which could be a convincing clue for those speculating 
that CLS may eventually retest its September low.  We're not 
expecting that deep of a sell-off but we do suspect the stock 
will fall to the $26 level.  On Thursday we lowered our exit 
price to $27.50 in an attempt to get out before any sizeable 
bounce might occur.  We still expect some support for the stock 
between $30 and $31 but overall the picture is pretty gloomy.  On 
the subject of a bounce, the stock could turn in a violent short-
term move higher at any time as bears move to cover but right now 
we would look for new overhead resistance near $34.50 to $35.00.  
Now having said that you may be surprised when we lower our stop 
to $34.05.  The stop loss strategy where you use the previous 
day's high as a guide for stop placement can work well on 
trending stocks.  It doesn't work all the time but it would have 
worked well for CLS during the last several sessions.  We're 
going to apply it tonight with a new stop just 10 cents above 
Friday's intraday high.  This new stop should protect a gain of 
$5.35 or 13.5%.  

Picked on February 5th at $39.40
Gain since picked:         +6.76
Earnings Date           01/31/02 (confirmed)




---

Check Point Software - CHKP - cls: 28.43 chg: +0.95 stop: 30.05

This play update for CHKP is pretty short.  The late day rally 
was due to the bounce in the Nasdaq.  As you know the bounce in 
the Nasdaq was due to a rally in the Dow Jones.  Even though 
buyers or bears covering shorts ahead of the weekend lifted 
shares of CHKP it was still a lower high, which was a steady 
trend all week.  More confident traders may want to consider this 
an entry point but we wouldn't be surprised to see CHKP rally to 
the $29.00 or $29.50 level before rolling over again.  A failed 
rally in this area might be a great low-risk entry with our stop 
at $30.05.  The short-term target is $25.00 with our ultimate 
target unchanged near the $20 level.  If you're trading software 
stocks you'll want to keep an eye on the GSO.X software index and 
of course MSFT since it is the largest component of the group.

Picked on February 21st at $27.48 
Gain since picked:          -0.95
Earnings Date            01/15/02 (confirmed)




---

Microsoft - MSFT - close: 57.99 change: -0.06 stop: 61.01

The Dow Jones may have turned in a 133-point rally but Dow-
component MSFT still closed in the red by six cents to end a very 
negative week.  We already mentioned Thursday how the stock had 
been under a lot of selling pressure and how the most recent 
rally attempt was met with renewed selling.  The breakdown under 
the $60 and $58.75 levels were pretty bearish for traders and 
volume has been picking up the last two sessions.  Why the $58.75 
level?  We would encourage readers to try putting a retracement 
bracket on a chart of MSFT.  We used the September low near 
$47.50 as the bottom and the $70 resistance level as the top.  It 
is amazing how the stock can trade to the different retracement 
levels (oh, if you can try adding the 23.6% Fibonacci level to 
your retracement tool to see the correlation between the price 
resistance at $65 in late January).  The point-and-figure chart 
is on a new column of O's and the vertical count leads us to 
believe our ultimate target near $50 is achievable.  Short-term 
traders may want to look for an exit at possible support of $55 
but don't be surprised if MSFT rallies back to the $59 level 
during a market bounce next week.  Taking a step back from the 
technical picture someone brought up the question about investor 
confidence and MSFT.  MSFT is such a large company that some 
investors might wonder how long will it be before someone says 
"let's look at their accounting".  I think this is just 
speculation and the folks at MSFT are no dummies and they'll 
probably come out just as strong and fast as GE did when the 
accounting question began to surface.  The growing economic data 
that is beginning to show the recession is over should help 
stocks like MSFT in the long run but right now it may be the 
lingering cloud of lagging PC sales.  Observant investors 
probably heard some positive comments on PC sales from the likes 
of DELL and other hardware guys but those comments were based on 
retail sales to individuals not corporate America.  It would 
appear that the drawstrings are still pretty tight on the IT 
budgets across the country.   

Picked on February 21st at $58.05 
Gain since picked:          +0.06
Earnings Date            01/17/02 (confirmed)




---

PMC Sierra - PMCS - close: 16.00 change: -0.93 stop: 17.26 *new*

It's been a very tough week for PMCS.  It started with a downside 
breakout from its pennant formation on both its daily and point-
and-figure charts.  Once the bears grabbed a hold of it they 
haven't looked back.  The stock continued to get hammered as 
negative news with CIENA's comments, the downgrade on Intel and 
the two new downgrades on JDSU undermining any fragment of 
investor confidence left in the telecom/optical/chip sector 
industries. The additional 5.49% drop today came on rising volume 
which is not what current shareholders want to see.  The stock is 
extremely short-term oversold but it's anyone's guess whether the 
$16 level will hold as interim support or whether bears will drag 
the stock down to $15, which might act as round-number 
psychological support.  We're not changing out exit price of 
$14.15 but we are lowering our stop loss.  In the CLS play update 
above we mention one stop placement strategy of using the 
previous day's high.  That same plan, which I will repeat doesn't 
always work, would have worked well on PMCS this week.  If you're 
looking ahead to Monday then the previous day's high is Friday's 
$17.20.  We're going to place our stop at $17.26.  This should 
help protect a gain of $3.45 or 16.6%.  Overall it would appear 
that PMCS' lack of participation in the late day rally today may 
be a clue that the bears aren't ready to cover yet on this stock.  
Don't let your profits evaporate by not adjusting your stop!

Picked on February 15th at $20.71 
Gain since picked:          +4.71
Earnings Date            01/24/02 (confirmed)






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

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

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

Apache Corp - APA - close: 51.57 change: +0.17 stop: 48.99

Company Description:
Apache Corporation is a large oil and gas independent with 
operations in the United States, Canada, Egypt, Western 
Australia, Poland, China and Argentina. (source: company press 
release)

Why We Like It:
We suspect that the recent uptrend in the oil and oil service 
stocks is just the beginning of a larger move.  We saw several 
really attractive stocks that looked great for potential long 
plays and it was a real challenge to pick just one to play this 
weekend.  The two we liked the most were APA, more of an oil 
producer and SLB, more of an oil service stock.  The OSX.X oil 
service index has already had a decent week so the OIX.X oil 
index could be right behind it.  However, both charts of APA and 
SLB look similar.  Actually, I preferred SLB but we chose to put 
it on the watch list.  We picked APA because it was an oil 
producer and its relative strength versus SLB was stronger.  
Besides, the price of oil appears to be building a bullish 
pattern on its own and is currently trading around $21 a barrel.  
It has resistance at $22 but might be able to break over it if 
the economy does continue rebounding and we do see military 
action against Iraq.  Short-term we would look for a move up to 
the $54 to $55 level.  This should be possible with shares rising 
on growing volume lately.  However, if the stock can breakout 
above $54/$55 then it would be a break of the neckline of its 
reverse head-and-shoulders.  This pattern on APA just happens to 
have two right shoulders which is not uncommon.  This would 
indeed be a powerful move.  Bulls can take comfort in the point-
and-figure chart as well since the stock has rebounded strongly 
off its bullish support line recently and produced a double-top 
breakout.  We're going to start the play with a stop at $48.99, 
which is 5% from its current share price.

Picked on February 22nd at $51.57 
Change since picked:        +0.00
Earnings Date            01/31/02 (confirmed)




---

CNF Inc. - CNF - close: 30.41 change: +0.53 stop: 28.99

Company Description:
CNF is a $4.9 billion management company of global supply chain 
services with businesses in regional trucking, air freight, ocean 
freight, customs brokerage, global logistics management and 
trailer manufacturing. (source: company press release)

Why We Like It:
Before we begin, we hope you took the time to look at a chart of 
CNF.  When you do come back and we'll talk... okay, looked at a 
chart?  Good, now you're probably wondering "why are they bullish 
on CNF?  The chart looks kind of bearish."  Excellent 
observation.  The recent trend in the stock has been bearish as 
shares have dropped from their January highs above $34 back to 
their support level near $30.  That is the key but first a little 
broader market analysis.  Part of ancient Dow theory suggests 
that the markets can't sustain any sort of meaningful rally if 
the Transports don't confirm the move higher.  This would appear 
to be even more true if we're coming out of a recession.  Now 
it's just theory but the transports (TRAN) have been inching 
higher the last few sessions.  The Dow Transports aren't taking 
off but the recent bounce at the 200-dma may be a good sign and 
is a higher low.  The group still has significant resistance at 
the 2800 level but the MACD appears like it could turn bullish at 
any moment.  Now jump back to CNF.  The stock has bounced between 
$29.50 and $30.00 three times since the 8th of February.  The 
trend still looks bearish but the strong move on Friday has 
sparked some hope that it will join up with the rest of the 
transport group.  Besides, if investors will start to listen to 
the recent economic reports that are starting to show a rebound 
from the recession then maybe they will begin to place new bets 
on companies like CNF who stand to benefit from the turnaround.  
This week is chock full of more economic data due to be released 
and could add more fuel to any fire for the bulls.  Third, we 
feel that initiating a play here, where the stock is so close to 
its support level, means we can limit our risk while trying to 
capture the majority of any rally attempt higher.  More 
conservative traders may attempt to go long with a tight stop 
under $29.50 but we are going to give ourselves a little bit more 
cushion and place our stop at $28.99, which is just under the 
200-dma.  The point-and-figure chart isn't the most exciting as 
the stock is currently in a column of O's but the vertical 
bullish count is projecting a price target of almost $60.  We're 
not looking for a move that high but 15% to 20% sounds 
attractive.  

Picked on February 22nd at $30.41 
Change since picked:        +0.00
Earnings Date            01/28/02 (confirmed)





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

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

Airborne Inc - ABF - close: 16.60 change: +0.62 stop: 14.95

After two weeks of waiting and watching ABF slowly inch higher we 
finally begin to see the move we have been expecting all along.  
The Transports have been bullish the last few sessions and could 
continue to be leaders in a weak market, which should draw money 
to the group.  Rival FDX is looking bullish and about to breakout 
above resistance but ABF has beat it to the punch and scored a 
new 52-week high.  Shares of Airborne had been struggling with 
the $16.50 level but the late-day rally in the Dow Jones help 
spur the final push in ABF and shares took off on strong volume.  
As one of the "cyclical" style stocks that Bailey talks about in 
his wrap this weekend we think ABF will continue to attract 
investor support so bulls probably need to start looking for new 
entries if you've been waiting for the breakout.

Picked on February 11th at $16.05 
Gain since picked:          +0.57
Earnings Date            02/01/02 (confirmed)




---

Rockwell Collins - COL - close: 23.00 change: +0.96 stop: 20.49

Bullish attention to the defensive sector didn't let up on 
Friday.  Actually, the whole group got a big lift higher when 
Northrop Gruman (NOC) made a bid for TRW, who has a sizeable 
defense-oriented unit.  Shares of COL benefited from the 
attention as investors began to speculate about further 
consolidation in the industry.  We are encouraged that shares 
closed at the $23 level, which is current resistance from the 
late January high.  Even more encouraging was the very strong 
volume of almost one million shares fueling the 4.3% move on 
Friday.  I know that Jeff mentioned his theory about a new issue 
breakout over the offering price.  If you didn't read the wrap 
this weekend I would encourage you to check it out.  Anyway, if 
COL can make it to the $24 mark it would be a new all-time high 
for the stock and shares should not have any overhead supply to 
weight it down.  Thus any advances could be exaggerated to the 
upside.  Of course it never hurts to play defensive stocks when 
the threat of war looms so near with strong words from the White 
House against Iraq.  Shares look good from here but it would hurt 
to consider a dip back to $22 as a potential entry either.

Picked on February 15th at $22.50 
Gain since picked:          +0.50
Earnings Date            04/17/02 (unconfirmed)




---

Forest Labs - FRX - close: 79.28 change: -0.89 stop: 77.49

The DRG.X drug index posted another strong day and it looks like 
it is about to break out to the upside over current resistance at 
$385.  However, if it does, it will have to overcome another 
hurdle with its 200-dma residing near the $390 level.  Drug 
stocks helping lead the sector higher are JNJ and ABT, which both 
look attractive if they breakout over their own resistance 
levels.  In contrast, shares of FRX are not looking so hot.  It 
would appear that investors are still worried about the bad news 
the company announced with its latest ML-3000 tests this last 
Wednesday.  The moves we saw on Wednesday and Thursday could have 
just been a bounce from the sharp drop on Tuesday.  Personally, I 
would probably be very cautious about any positions in FRX and 
would not look to be adding to it at this time.  With other, 
stronger candidates for our money it doesn't hurt to wait and see 
if FRX will bounce again at $78 or breakdown under development 
worries and drug delays.  Look for JNJ and ABT on the watch list 
this weekend.

Picked on February 15th at $82.58 
Gain since picked:          -3.30
Earnings Date            04/16/02 (unconfirmed)




---

H R Block - HRB - close: 48.73 chg: -0.27 stop: 47.01 *new*

We mentioned in the Thursday update that HRB might slip back to 
the $48 level before moving higher and it looks like the dip to 
$48.25 on Friday may be as close at it gets.  The stock begin to 
trade higher again into the close and with earnings expected this 
Wednesday there may be some pre-earnings excitement for the 
stock.  We still have not yet decided if we're willing to take 
the extra risk and hold over the earnings report after the bell 
on Wednesday.  The safer play would be to close the position 
ahead of the report and we're leaning that direction now.  
Considering that the stock really hasn't moved as much as we'd 
expected it would not hurt to move your stop up to just under $48 
to protect at least a small gain.  We're going to move our stop 
to breakeven at $47.01 just to protect our capital from any 
surprises.  

Picked on February 5th at $47.01 
Gain since picked:         +1.70
Earnings Date           02/27/02 (confirmed)






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

Citigroup Inc - C - close: 42.40 change: -0.40 stop: 45.05

As the confidence crisis continues on Wall Street investors are 
choosing not to hold on to banking giant Citigroup in hopes of 
avoiding any further exposure the company hasn't told us about 
yet.  The financial behemoth is already suffering from its 
exposure to the Argentina melt-down and now as the Enron 
microscope begins to broaden its scope Citigroup could be next to 
face government scrutiny.  We already knew that a list of who's 
who in the banking group had been part of the shady LJM 
partnerships in which Enron did a lot of the off-balance-sheet 
transactions.  JPM and Citigroup were both part of the LJM deal.  
This week J.P. Morgan has come under the gun for its offshore 
entity called Mahonia, which traded oil and gas with Enron.  
Well, at least they said they traded oil and gas.  According to 
the press, JPM never received any fuel for its money and insurers 
are claiming those "trades" should be relabeled as loans.  
Currently, JPM is going to court with its insurers over these 
deals.  It would not take very much for Wall Street and the 
government to swivel or widen its focus to include Citigroup as 
they continue to ferret out every Enron rabbit hole.  Shares of C 
fell almost one percent on Friday while its banking compatriot 
JPM fell to three year lows from its negative attention.  Right 
now the trend is down and volume is picking up steam again for 
Citigroup.

Picked on February 21st at $42.80
Gain since picked:          +0.40
Earnings Date            01/17/02 (confirmed)


 

---

Lehman Brothers - LEH - cls: 55.44 chg: -0.41 stop: 58.03 *new*

Yet another analyst has scaled back their earnings expectations 
for the brokerage industry and this was the likely culprit for 
LEH's early morning weakness.  The stock fell to new relative 
lows of $53.59 before bouncing back above the $55 level.  We 
glanced at the rest the sector and a lot of the big boys on Wall 
Street continue to look weak.  This has us thinking that the 
XBD.X broker/dealer index could easily breakdown under the 450 
support level in the next few sessions.  The last couple of days 
have produced some interesting developments on the point-and-
figure chart for LEH.  The rebound back above the $58 level 
created a three-box pull back which has promptly been surpassed 
by a new column of O's and a new low.  We are going to initiate 
an exit price of $50.25 so we'll be ready if shares spike down on 
any high-powered sell-off.  We're counting on enough support at 
the $50 level to slow any further descent for several sessions.  
Secondly, we are going to lower our stop to breakeven at $58.03.  
Once LEH finally closes under the $55 level we'll lower our stop 
again.

Picked on February 15th at $58.03 
Gain since picked:          +2.59
Earnings Date            12/20/01 (confirmed)







==================================================================
HIGH RISK/HIGH REWARD (HR) section
==================================================================

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

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

Adelphia Communications - ADLAC - cls: 21.30 chg: +0.68 stop: *note*

One might think that the last two days of strength we see in 
ADLAC might discourage us from our bearish perspective.  
Actually, we still subscribe to the trading strategy we submitted 
on Thursday.  Shares may have rallied higher during Friday's 
session but failed to trade above Thursday's high or above the 
$22 level.  It is this $21.50 to $22.00 level, bolstered by the 
10-dma, that is acting as over head resistance.  Volume has been 
declining the last two days which does not communicate conviction 
on part of the bulls.  However, we will concede to the bulls that 
the MACD is about to turn positive, which may be a cautionary 
flag for less aggressive traders.  If you look at the point-and-
figure chart the picture is a little bit clearer.  The bounce 
higher has produced a three-box pull back.  The question traders 
are asking is "is it the start of a true rebound?" or "is it 
merely an oversold bounce so bears can do a little short covering 
and reposition for the next leg down?"  Until shares trade above 
$22.00 we're going to play with the strategy that it's just a 
bounce.  Aggressive traders can consider shorts here with a stop 
just above $22 but the newsletter is still going to wait for the 
move under $18.74 before we initiate a position.

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







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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.

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Do not duplicate or redistribute in any form.





PremierInvestor.net Newsletter         Weekend Edition 02-22-2002
                                                   Section 3 of 3
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/022202_3.asp
=================================================================

In section three:

Market Watch for Week of February 25th
   - Major Earnings
   - Stock Splits
   - Economic Reports

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)

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


==================================================
Market Watch for the week of February 25th
==================================================

  ------------------------
  Major Earnings This Week
  ------------------------

Symbol  Company               Date           Comment      EPS Est

------------------------- MONDAY -------------------------------

CPRT   Copart                 Mon, Feb 25  After the Bell    0.14
TV     Grupo Televisa, S.A.   Mon, Feb 25  -----N/A-----     0.60
LOW    Lowe`s Companies       Mon, Feb 25  Before the Bell   0.25
MVSN   Macrovision            Mon, Feb 25  After the Bell    0.20
PRHC   Province Healthcare    Mon, Feb 25  After the Bell    0.30
SKYW   SkyWest                Mon, Feb 25  Before the Bell   0.20
WMC    WMC                    Mon, Feb 25  -----N/A-----      N/A

------------------------- TUESDAY ------------------------------

NDN    99 CENTS Only          Tue, Feb 26  Before the Bell   0.31
AX     Asia Glbl Crosing Ltd. Tue, Feb 26  After the Bell   -0.28
AZO    AutoZone               Tue, Feb 26  After the Bell    0.49
BMO    Bank Of Montreal       Tue, Feb 26  -----N/A-----      N/A
BTI    British Am Tobacco     Tue, Feb 26  Before the Bell    N/A
BNL    Bunzl PLC ADS          Tue, Feb 26  -----N/A-----      N/A
CCU    Clear Channel Comm     Tue, Feb 26  After the Bell   -0.45
EV     Eaton Vance            Tue, Feb 26  Before the Bell   0.47
FD     Federated Dept Stores  Tue, Feb 26  Before the Bell   1.86
HD     Home Depot             Tue, Feb 26  -----N/A-----     0.28
NBG    National Bank Greece   Tue, Feb 26  -----N/A-----      N/A
AHM    Nycomed Amersham       Tue, Feb 26  Before the Bell    N/A
ORLY   O`Reilly Automotive    Tue, Feb 26  After the Bell    0.30
OKE    Oneok                  Tue, Feb 26  After the Bell    0.30
PLL    Pall                   Tue, Feb 26  After the Bell    0.20
PDE    Pride International    Tue, Feb 26  After the Bell    0.09
PUK    Prudential PLC         Tue, Feb 26  -----N/A-----      N/A
RCI    Renal Care Group       Tue, Feb 26  After the Bell    0.40
SMTC   Semtech                Tue, Feb 26  After the Bell    0.11
TRLY   Terra Lycos, S.A.      Tue, Feb 26  -----N/A-----    -0.05
TOL    Toll Brothers          Tue, Feb 26  Before the Bell   1.05
URI    United Rentals         Tue, Feb 26  -----N/A-----     0.33
WMI    Waste Management       Tue, Feb 26  -----N/A-----     0.25

-----------------------  WEDNESDAY -----------------------------

ASX    Adv Semi Engineering   Wed, Feb 27  -----N/A-----     0.05
BLI    Big Lots, Inc.         Wed, Feb 27  Before the Bell   0.49
CED    Canadian Nat Resources Wed, Feb 27  -----N/A-----     0.30
SRV    Service Corp Int       Wed, Feb 27  After the Bell    0.04
TLD    TDC                    Wed, Feb 27  Before the Bell    N/A
TEO    Telecom Argentina STET Wed, Feb 27  After the Bell    0.11
TEM    Telefonica Moviles     Wed, Feb 27  -----N/A-----     0.04
TJX    TJX Companies          Wed, Feb 27  Before the Bell   0.56
TMBR   Tom Brown              Wed, Feb 27  After the Bell   -0.01

------------------------- THURSDAY -----------------------------

DISH   Echostar Comm A        Thu, Feb 28  Before the Bell  -0.02
FIA    Fiat SPA ADR           Thu, Feb 28  -----N/A-----      N/A
NMGa   NMGa                   Thu, Feb 28  Before the Bell   0.50
NOVL   Novell                 Thu, Feb 28  After the Bell   -0.01
PDLI   Protein Design         Thu, Feb 28  After the Bell   -0.06
SHPGY  Shire Pharm Group      Thu, Feb 28  -----N/A-----     0.40
SYT    Syngenta AG            Thu, Feb 28  -----N/A-----      N/A
TGT    Target Corporation     Thu, Feb 28  -----N/A-----     0.72
TEF    Telefonica, S.A.       Thu, Feb 28  During the Market  N/A
IPG    The Interpublic Group  Thu, Feb 28  After the Bell    0.30
TIF    Tiffany Co             Thu, Feb 28  Before the Bell   0.56

------------------------- FRIDAY -------------------------------

CCI    Crown Castle Int       Fri, Mar 01  Before the Bell  -0.43
RANKY  Rank Group Limited     Fri, Mar 01  -----N/A-----      N/A
REP  Repsol YPF, S.A.         Fri, Mar 01  Before the Bell   0.21


  -------------------------------
  Upcoming Stock Splits In The Next Two Weeks...
  -------------------------------

Symbol  Company Name              Ratio    Payable     Executable

CEBC    Centennial Bank          21:20     02/22       02/25
ACS     Affiliated Computer Svcs  2:1      02/22       02/25
FINB    First India Corp          5:4      02/26       02/27
FBCI    Fidelity Bancorp          3:2      02/28       03/01
CCBN    Central Coast Bancorp     5:4      02/28       03/01
NJR     New Jersey Resources      3:2      03/01       03/04
RMCF    Rcky Mtn Chocolate Factry 4:3      03/04       03/05
TRR     TRC Companies             3:2      03/05       03/06
GILD    Gilead Sciences           2:1      03/07       03/08


  --------------------------
  Economic Reports This Week
  --------------------------

We have a full week of economic reports this week, which may
help turn investor sentiment around.  Although last week's positive
reports did little to lift investor confidence.  This week the
Consumer confidence numbers on Tuesday, the GDP numbers for Q4 on
Thursday, and the personal spending and income numbers on Friday
will be in the spotlight.


Monday, 02/25/02
----------------
Existing Home Sales (DM) Jan  Forecast:  5.20M  Previous:   5.19M


Tuesday, 02/26/02
-----------------
Consumer Confidence (DM) Feb  Forecast:   98.0  Previous:    97.3


Wednesday, 02/27/02
-------------------
Durable Orders(BB)       Jan  Forecast:   1.0%  Previous:    1.7%
New Home Sales (DM)      Jan  Forecast:   925K  Previous     946K


Thursday, 02/28/02
------------------
Initial Claims (BB)    02/23  Forecast:    N/A  Previous:     N/A
GDP-Prel. (BB)            Q4  Forecast:   0.6%  Previous:    0.2%
Chain Deflator-Prel. (BB) Q4  Forecast:  -0.3%  Previous:   -0.3%
Chicago PMI (DM)         Feb  Forecast:   47.0  Precious:    45.1
Help Wanted Index (DM)   Jan  Forecast:    N/A  Previous:      46


Friday, 03/01/02
----------------
Truck Sales (NA)         Feb  Forecast:    N/A  Previous:    7.1M
Auto Sales (NA)          Feb  Forecast:    N/A  Previous:    5.3M
Personal Spending (BM)   Jan  Forecast:   0.4%  Previous:   -0.2%
Personal Income (BM)     Jan  Forecast:   0.1%  Previous:    0.4%
Mich Sentiment-Rev. (DM) Feb  Forecast:   91.0  Previous:    90.9
ISM Index (DM)           Feb  Forecast:   51.0  Previous:    49.9
Construction Spending(DM)Jan  Forecast:   0.1%  Previous:    0.2%


Definitions:
DM=  During the Market
BB=  Before the Bell
AB=  After the Bell



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

CVX     ChervonTexaco Corp         83.70     +1.59
COC     Conoco Inc                 27.32     +0.70
HAL     Halliburton Co             16.49     +0.70
BR      Burlington Resources Inc   37.05     +1.35
DVN     Devon Energy Corp          42.40     +1.20

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

SKS     Saks Holdings Inc          11.25     +1.53
DDS     Dillard's Inc              18.70     +1.42
LPX     Louisiana-Pacific Corp      9.25     +1.05
SNS     The Steak N Shake          13.65     +1.10

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

XOM     Exxon Mobil Corp           40.72     +1.57
BUD     Anheuser-Busch Companies   50.01     +1.45
AZO     Autozone Inc               70.01     +1.11

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

MDT     Medtronic Inc              45.92     -1.45
GD      General Dynamics           87.70     -4.47
GDT     Guidant Corp               41.45     -4.70
BBY     Best Buy Co Inc            67.61     -3.04
DOX     Amdocs Ltd                 28.80     -1.11
CDWC    CDW Computer Centers       47.94     -2.38

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

MFC     Manulife Financial         25.58     -0.91
MNY     The Mony Group Inc         37.50     -0.65
CBL     CBL & Assoc Properties     34.23     -0.78




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only. The information provided herein is not to be construed
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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.

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Do not duplicate or redistribute in any form.




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