Option Investor

Daily Newsletter, Thursday, 03/21/2002

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PremierInvestor.net Newsletter                Thursday 03-21-2002
                                                   section 1 of 2
Copyright  2001, All rights reserved.
Redistribution in any form is strictly prohibited.

The entire newsletter is best viewed in COURIER 10 for alignment
To view this email newsletter in HTML format with imbedded
charts and graphs, click here:

In section one:

Market Wrap:      Oracle says, "visibility remains poor".
Market Sentiment: Still More on the VIX

U.S. Market Numbers
MARKET WRAP  (view in courier font for table alignment)
      3-21-2002           High     Low     Volume Advance/Decline
DJIA   10,479.84 - 21.73 10505.72 10354.74  1.3 bln   1627/1419
NASDAQ   1868.83 + 35.96  1870.16  1825.99  1.6 bln   2132/1332
S&P 100   582.44 +  0.27   583.43   574.86   Totals   3759/2751
S&P 500  1153.58 +  1.73  1155.10  1139.48
RUS 2000  505.44 +  6.40   505.45   497.91
DJ TRANS 2852.98 - 41.13  2900.63  2808.59
VIX        19.98 -   .75    21.76    19.98
VXN        36.98 -  1.18   39.38     36.98
TRIN         .98
CBOE Put/Call Ratio: .69

Market Wrap

Utilities were quite a shock!

Months ago I must have set an alert at my trading station on the 
Utility Sector Index (UTY.X) at the 335 level and forgotten about 
it.  It's not a group of stocks most associated with active 
trading and I can't remember the last time this sector actually 
showed up as a leading sector winner.  Today's alert just drives 
home the point that each day is a new day and can be filled with 
new experiences or dynamics that always seem to present 
themselves in the markets.

In today's 01:00 EST Update, my esteemed colleague and fellow 
trader Eric Utley discussed some stocks in this sector.  He 
references an update I had written earlier in the day for 
OptionInvestor.com that mentioned the broader technicals that 
were unfolding in the group.  For those subscribers to 
PremierInvestor.net that couldn't access that update here it is.  
I'm going to leave the comments unedited, but the UTY.X finished 
the session at 340.47 +2.56% and traded strong into today's 

I will also want you to notice the 61.8% retracement level at 
354.67.  Later in today's trading session, I noticed a rather 
obscure option trade for 350 contracts (35,000) at the April $355 
strike.  This type of trade may indeed be some type of "hint" 
that it is a near-term institutional target.

This caught my eye!

I had to slap my computer terminal a couple of times this morning 
to make sure the quote I was getting from the Utility Index 
(UTY.X) was correct as this sector was at the top of the leader 
board today.  What surprised me is that I don't remember the last 
time I saw this sector as a leading gainer.  When I pulled up a 
bar chart, this is what I saw.

Utility Sector Index Chart - Daily Interval

A nice little "cup and handle" break out has taken place in the 
Utility Index (UTX.X) today and the break comes right at my 
retracement resistance of 334 and the longer-term 200-day moving 
average.  Near-term bullish targets would be the 344 and 354 
levels.  A stop to protect against weakness would be just under 
the "handle" at 324.

Utility Index Chart - $4 box

There's also some "electricity" sparking the supply/demand chart 
in the Utility Index (UTY.X) with a trade at 336.  This breaks 
the downward trend.  Using the bar chart and stop at $324 and a 
longer-term bullish vertical count of $392, there's some good 
risk/reward for bulls to be looking at.

I need to try putting together a list of potential stocks.  Like 
I said, this action has caught me a bit by surprise.  No need to 
go off half cocked and get wiped out.  There is plenty of time to 
get long.  Q-charts has sector lists and I need to check both the 
"gas" and "electric" utility stocks.  Each can move very 
independent of each other and we need to be in the best group.

I do know that Enron won't be a candidate.

Back to the present

The point and figure chart ended up adding another "X" to the 
current column at 340 in the Utility Index (UTY.X) chart and this 
should now have us looking for a potentially longer-term bullish 
move to be taking hold.  If we were to think about today's break 
higher at 336 in the scope of an index breaking out of a base, 
then the Utility Index (UTY.X) has just broken out of a 6-month 
base dating back to October (red A).  That decline back in 
October was helped along by the Enron debacle that really began 
to unfold on October 18th.

I didn't have to look very far through Eric's "Components" list 
in the 01:00 update to find a chart pattern in Ameren Corporation 
(NYSE:AEE) $41.69 +1.18% that offers what I feel an excellent 
risk/reward trade and may now just be gaining some momentum.

Ameren Corp. (AEE) Chart - Daily Interval

What I find compelling in the bar chart of Ameren (AEE) is the 
HUGE volume spike that took place on February 27th just above 
retracement support of $39.17.  On February 27th, AEE raised 
roughly $500 million by pricing 5 million shares of common stock 
at $39.50 ($197.5 mill) and an addition convertible offering that 
carried a 9.75% dividend, which are convertible into common stock 
at $46.61.   

Several days later, we see the stock higher and another large 
volume spike.  I'm thinking here that a bear may have tried 
shorting shares of AEE without the leverage of the underlying 
convertible and when the stock didn't discount (go below) the 
spot offering of $39.50, they may have called it quits up at $43.

Subscribers that have been with us awhile will remember an update 
where I explained how shorts/bears will actually short some 
stocks where a convertible offering was placed.  In fact, 
Adelphia Communications (NASDAQ:ADLAC) $21.81 +0.78% on our 
bearish play list is in part a play on such on offering that 
ADLAC did back on January 16th.  This ADLAC convertible 
commentary was on February 19th and 01:00 update. 

While the ADLAC convertible is still "underwater", the Ameren 
(AEE) isn't.  What's compelling perhaps for bulls, is that as of 
February 8th, there was about 2.6 million shares short, which 
would take about 12 days to cover.  This data is rather old, but 
it does give credence to the thought that there was a short 
looking for the door up at $43.  If he/she isn't done, then the 
bullish action that looks to be developing in the group may just 
be the prod to step up some short covering once again.

Before we fall asleep, please note that the retracement bracket 
is defined by lows and highs that were actually just 2 months in 
duration.  In essence, this stock did trade from the $37.37 level 
to a high at $46.81 in a two-month period from October 27, 2000 
to December 26, 2000.  That's a 25% move in just two months.

You can also see from the bar chart that this stock has had a 
tendency to make some decent 2-3 week runs.  I see three days of 
recent upside and think there is more still to come.  A break 
above $44 may well see a continued run up into the $45-$47 range.  

So what happened today?

We saw some diverging markets today as the Dow Industrials had 
trouble all session and finished down 21 points at 10,479.  While 
the Dow managed to recoup the bulk of earlier losses (-142 at its 
lows) the Philly Fed report for March was reported at 12:00 EST 
and its 11.4 reading was well below consensus of 17.8.  The "bad 
news" in the report was that prices paid (input costs) rose above 
neutral to 3, the first positive reading since June.  Prices 
received also moved in to positive territory, as the 0.7 reading 
was the highest since October 2000.  The report went on to say 
that price pressures are beginning to show themselves as 
commodity prices rise from multi-decade lows and the 
manufacturing sector creeps out of a recession.

While one can never be certain, I do think this Philly Fed report 
did spook some market participants and had them selling some 
gains from the blue chips that have made some nice bullish moves 
in recent weeks.  Hardest hit were the deeper cyclicals that have 
been doing so well.  I think the bearish action was a good case 
of jitters and profit taking.

Conversely, the lagging NASDAQ Composite (COMPX) had a bullish 
day and finished up 1.96% at 1,868.  Again, I think this was also 
attributed to some profit taking, but this time by bears buying 
the "bad news" found in the Philly Fed report.

You'll see on our play list that we were stopped out of Brocade 
Communications (NASDAQ:BRCD) $25.73 +11.28% as profiled at 
$24.21.  In quick review, we did the right thing by tightening 
down a stop.  As discussed in Tuesday evening wrap, this stock 
had achieved a bearish vertical count of $22 and was close to 
doing it again.  We protected a nice gain by cinching down a stop 
and this was good.

Let me not just talk about our successes, but point out what I 
believe a terrible demonstration of risk/reward management.  
Let's talk about Emulex (NASDAQ:EMLX) $30.94 +7.65%.  I'm not 
going to pound the table to hard here, but we should not have 
left our stop up at $32.31.  At least I don't think we should 
have.  On Monday evening, the stock closed at a low of $26.47 and 
we were sitting on a nice 9% gain from profile.  Now you and I 
are looking at a loss of 5.4%.  

What "bugs" me about this trade is that the stock closed Monday 
evening at two potential levels of support.  I've said before 
that there's an old saying among point and figure chartists that 
says "the first test of bullish support can be most painful for 
the bears."

Emulex Chart - $0.50 and $1 box

I don't like seeing a 9% gain ever turn into a loss and now I'm 
in no-mans land and looking for weakness at the open to get a 
move started back lower.  If not, I've got to assess risk to $33 
and then to $36.  I don't want to "think" about either and would 
lower a stop to just above today's high.

There's no economic news due out tomorrow, but earnings are 
starting to roll out.  

One earning's report that may work in a Celestica (NYSE:CLS) 
$35.85 +0.00% bear's favor was from fellow electronic contract 
manufacturer Solectron (NYSE:SLR) $8.25 -1.43%, when they 
reported Q2 earnings of $0.01 a share, which was a penny below 
consensus looking for $0.02 a share.  Revenues for quarter were 
$2.97 billion versus estimates of $2.96 billion.  Guides Q3 lower 
with revenue in range of $2.7-$3.1 billion versus consensus 
estimate of $3.37 billion, sees a Q3 net loss in the range of 
$0.06-$0.04 per share versus current consensus estimate for 
earnings of $0.06 per share. Stock traded some size (50K and 38K) 
at $8.20, and currently trades $8.11 in after hours. 

Jeff Bailey
Senior Market Technician

Market Sentiment

Still More On The VIX
By Eric Utley

The CBOE Market Volatility Index (VIX.X) closed below the 20.00
level for the first time in a long time.  Is it time to load up
on out-of-the-money (OTM) distant month puts?  Where's Austin
when I need him?

Before I get a slew of questions, let me answer what 'OTM' and
'distant month' mean.  OTM is away from the market; lower.  It
varies from each trader and depends on individual risk
preference.  Distant month means not the front-month; it can
mean as soon as May or as distant as January.  Again, it depends 
on the individual.

With that out of the way, let me observe.  The VIX hasn't traded
below 20.00 since August 2000.  You can pull-up a chart of any
major average to find out what happened to stocks following
August 2000.  It's important to note, however, that the VIX
traded below 20.00 for about three weeks back in August 2000.
Prior to that period, the VIX traded below 20.00 during the
summer of '99.  It did so for about four weeks.  That's why the
common mantra among traders is to use distant month puts, not
the ones that expire in a few weeks, when adopting a bearish
bias based upon a low VIX.

Before I delve in further, let me step back.  A VIX at or below
20.00 means that implied volatility is relatively low, using
recent history as a guide.  Implied volatility is the biggest
contribution to premiums next to underlying price.  Therefore,
options are on sale.  The discount means that buying options is
a much better practice than selling options in terms of the
risk trade-off.  In other words, selling covered calls or naked
puts is not smart in this market, at least in my opinion.  What
is smart is finding stocks at inflection points and using a
straddle or strangle to take advantage of a big forthcoming
move.  Leverage, baby, it's great!

To digress, there's been a lot of talk about the VIX recently.
Some on Option Investor, coming from Austin and Mark, but also
from other media outlets.  Each offering different opinions and
observations.  Hopefully I can shed some clarity.  But I hate to
view the VIX from a micro standpoint, because it's really no
that difficult to use.  Nevertheless, at the request of more than
one reader, I'm setting forth some levels and ideas for the VIX
using a point and figure chart.

There are two important levels to take away from the chart
below, which employs a 0.50 point box.  First, the current
vertical count is 16.00.  Yes, the VIX could work that low.
Second, the current set-up won't generate a new buy signal
(increased fear) until the 23.50 level, which would break a
triple-top.  Such a move may be more meaningful and reveal a
heightened state of fear, something to watch for.

VIX - 0.50 Point Box


Market Averages


52-week High: 11350
52-week Low :  8062
Current     : 10480

Moving Averages:

 10-dma: 10564
 50-dma: 10072
200-dma:  9998

S&P 500 ($SPX)

52-week High: 1316
52-week Low :  945
Current     : 1154

Moving Averages:

 10-dma: 1161
 50-dma: 1128
200-dma: 1145

Nasdaq-100 ($NDX)

52-week High: 2071
52-week Low : 1089
Current     : 1489

Moving Averages:

 10-dma: 1504
 50-dma: 1498
200-dma: 1547

Biotech ($BTK)

The BTK was the day's best performing sector Thursday with its
3.87 percent pop.  The BTK's gain narrowly out paced the 3.56
run in the Disk Drives ($DDX).

Leader gainers in the biotech space included Protein Design
Labs (NASDAQ:PDLI) with its 21.83 percent rally despite its
seemingly bad news Wednesday night.  Others included ImClone
(NASDAQ:IMCL), Millennium (NASDAQ:MLNM), and Incyte

52-week High: 676
52-week Low : 382
Current     : 535 

Moving Averages:

 10-dma: 522
 50-dma: 510
200-dma: 537

Paper ($FPP)

The FPP was the worst performing sector in Thursday's session
with its 1.88 percent drop.  The cyclicals were the poorest
performing broad group of stocks for the day, which was
interesting because the group has been the market leader

Leading to the downside in the FPP included Louisiana
Pacific (NYSE:LPX), Abitibi (NYSE:ABY), Weyerhaeuser (NYSE:WY)),
and International Paper (NYSE:IP)

52-week High: 381
52-week Low : 270
Current     : 367

Moving Averages:

 10-dma: 371
 50-dma: 347
200-dma: 330


Market Volatility

WHOA!  The VIX closed below the 20.00 level Thursday for the
first time in 18 months.  The late-day rally in stocks and
earlier reversal in bonds contributed to the VIX's demise

Meanwhile, nothing new in the VXN.  It traced another all-time

CBOE Market Volatility Index (VIX) - 19.98 -0.75
Nasdaq-100 Volatility Index  (VXN) - 36.98 -1.18


          Put/Call Ratio  Call Volume   Put Volume
Total          0.93        434,545       405,047
Equity Only    0.82        397,048       324,129
OEX            1.18          8,669        10,189
QQQ            0.72         34,965        25,172

Bullish Percent Data

           Current   Change   Status
NYSE          63      + 0     Bull Confirmed
NASDAQ-100    65      - 4     Bull Confirmed
DOW           77      + 0     Bull Confirmed
S&P 500       76      + 0     Bull Confirmed
S&P 100       78      + 0     Bull Confirmed

Bullish percent measures the number of stocks in an index 
currently trading on a buy signal on their point and figure 
chart.  Readings above 70 are considered overbought, and readings 
below 30 are considered oversold.

Bull Confirmed  - Aggressively long
Bull Alert      - Cautiously long
Bull Correction - Pause or pullback in upward trend
Bear Alert      - Take defensive action if long
Bear Confirmed  - High risk if long, good conditions for shorting
Bear Correction - Pause or rebound in downtrend


 5-Day Arms Index  0.94
10-Day Arms Index  1.05
21-Day Arms Index  1.03
55-Day Arms Index  1.22

Extreme readings above 1.5 are bullish, and readings below .85 
are bearish.  These signals don't occur often and tend be early, 
but when the do, they can signal significant market turning 


Market Internals

        Advancers     Decliners
NYSE      1666           1498
NASDAQ    2158           1359

        New Highs      New Lows
NYSE      143             63
NASDAQ    149             25

        Volume (in millions)
NYSE     1,323
NASDAQ   1,429


Commitments Of Traders Report: 03/12/02

Weekly COT report discloses positions held by small specs
and commercial traders of index futures contracts at the 
Chicago Mercantile Exchange and Chicago Board of Trade. COT data 
can be found at www.cftc.gov.

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 tend 
to be wrong.  

S&P 500

Attention!!  Commercial traders continued to build their net
bearish position while small traders reached an extreme
bullish position.

Commercials   Long      Short      Net     % Of OI 
02/26/02      366,258   432,258   (66,000)   (8.3%)
03/05/02      361,254   445,989   (84,735)  (10.5%)
03/12/02      396,050   483,606   (87,556)   (9.9%)

Most bearish reading of the year: (111,956) -   3/6/01
Most bullish reading of the year: ( 36,481) - 10/16/01

Small Traders Long      Short      Net     % of OI
02/26/02      139,183     62,087   77,096     38.3%
03/05/02      161,711     60,941  100,770     45.3%
03/12/02      179,825     75,025  104,800     42.6%

Most bearish reading of the year:  36,513 - 5/01/01
Most bullish reading of the year: 104,800 - 3/05/02

Nasdaq commercial traders added a number of short positions for
a big increase in the group's net bearish position.  Meanwhile,
small traders grew slightly more bullish.

Commercials   Long      Short      Net     % of OI 
02/26/02       33,589     34,091      (502)  (0.7%)
03/05/02       33,549     35,419    (1,870)  (2.7%)
03/12/02       37,415     42,942    (5,527)  (6.9%)

Most bearish reading of the year: (15,521) -  3/13/01
Most bullish reading of the year:   7,774  - 12/21/01

Small Traders  Long     Short      Net     % of OI
02/26/02        9,517    11,416    (1,899)    (9.1%)
03/05/02       11,961    11,214       747      3.2% 
03/12/02       14,571    13,045     1,526      5.5%

Most bearish reading of the year:  (9,877) - 12/21/01
Most bullish reading of the year:   8,460  -  3/13/01


Dow Jones commercial traders dropped both long and short
positions, while maintaining their net bullish position.
Small traders dropped a number of longs and added a small number
of shorts of an increase in their net bearish position.

Commercials   Long      Short      Net     % of OI
02/26/02       33,322    21,110   12,212     22.4%
03/05/02       37,036    25,554   11,482     18.3% 
03/12/02       35,080    23,204   11,876     20.4%

Most bearish reading of the year: (8,322) -  1/16/01
Most bullish reading of the year: 15,135  - 10/16/01

Small Traders  Long      Short     Net     % of OI
02/26/02        6,333    12,547    (6,214)   (32.9%)
03/05/02        6,589    13,057    (6,468)   (32.9%) 
03/12/02        6,400    13,070    (6,670)   (34.3%)

Most bearish reading of the year:  (8,777) - 10/12/01
Most bullish reading of the year:   1,909  -  1/16/01


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Do not duplicate or redistribute in any form.

PremierInvestor.net Newsletter                Thursday 03-21-2002
                                                   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
To view this email newsletter in HTML format with imbedded
charts and graphs, click here:

In section two:

Net Bulls
  Bullish Play Updates: BBH, CSC
  Bearish Play Updates: CLS, EMLX, CHKP, CSCO
  Closed Bearish Play:  BRCD

Stock Bottom / Active Trader
  Bullish Play Updates: DOL, KSS, OHP, PSS

High Risk / High Reward
  Bullish Play Updates: HIG, PVN
  Bearish Play Updates: ADLAC

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

Net Bulls (NB) section

NB Play Updates

  Bullish Play Updates

Biotech HOLDRs - BBH - close: 127.80 change: +3.55 stop: 119.45

It was a banner day for biotechs.  The BTK.X biotech index rallied 
almost 20 points to close at 535 for a 3.87% gain.  The sector is 
close to breaking out above its 200-dma, which would draw more 
attention from the bulls.  The BBH biotech HOLDRs also had a great 
day with almost every stock in its basket posting strong gains.  
We list most of the leaders here: AMGN +1.93%, BGEN +2.48%, CHIR 
+3.22%, ENZN +4.21%, DNA +3.32%, GENZ +2.66%, GILD +3.00%, HGSI 
+5.76%, IDEC +3.78%, MEDI +3.88%, MLNM +8.03% and SEPR +5.67%.  
This sort of performance helped created a bullish engulfing 
candlestick pattern for the BBH, which is a positive sign.  We 
would look for the up trend to continue but the group might see 
some profit taking tomorrow with the weekend ahead of us.
Picked on February 20th at $120.00
Gain since picked:           +7.80
Earnings Date                  N/A


Computer Sciences - CSC- close: 51.00 change: -0.53 stop: 49.74

Did someone forget to tell CSC that the tech sector rallied today?  
Shares continued to fall back after profit taking hit the stock on 
Wednesday.  The good news was CSC found support at the $50 level 
where one would have expected.  Shares did rebound a full point by 
the close but it was not very impressive.  Bulls looking for a new 
entry point could use today as a low-risk entry but we're more 
concerned by the stock's lack of participation in the broader 
market rebound.  The MACD is about to produce a bearish crossover 
and the stochastics don't look so hot.  We would recommend that 
bulls confirm both stock and market direction before committing 
any capital to the play.  Fortunately, if you were to enter here
our stop is only 2.4% away but there's no reason to enter if 
shares look weak tomorrow.  No sense throwing away 2% for the fun 
of it.  We'd rather be in Vegas.

Picked on March 15th at $52.25
Change since picked:     -1.25
Earnings Date         01/31/02 (confirmed)

  Bearish Play Updates

Celestica - CLS - close: $35.85 change: -0.00 stop: 37.21 *new*

The bearish trend continues for electronics manufacturer 
Celestica.  The last couple of days continue to confirm our 
bearish indicators with the MACD actually producing a bearish 
crossover (and under the zero line we might add) while volume has 
been growing on these down days.  The key move appeared to be CLS' 
break under the $36 level of support by Wednesday's close.  The 
weakness continued today but the rebound in the markets lifted 
even the likes of beaten shares of CLS to finish with no change in 
price for the session.  All in all things look okay for bears but 
the stock was beginning to look a little oversold and we might 
have been expecting a bounce soon.  Yet no bounce is likely to 
occur.  The reason was rival Solectron's earnings announcement 
today.  SLR announced their Q2 numbers and the results were not 
good.  Consensus estimates for SLR had been 3 cents a share and 
the company came in with 1 cent or a profit of just $8.3 million.  
Revenues were also down to $3 billion, which is 200 million less 
than the previous quarter and significantly less than the $5.4 
billion from the year earlier.  SLR's CFO was quoted in the 
conference call with this remark, "A broad sustainable recovery 
has been pushed out...none of us anticipated we would go this low 
and this long."  With a poor Q2 results and no improvement on the 
horizon for Q3, the industry could see a flight of investors which 
should translate into a favorable environment for our CLS short 
play.  CLS will get a chance to release their own earnings results 
in about three to four weeks.  In the mean time we are going to 
lower our stop to $37.21, which is just over Wednesday's high.  A 
more conservative trade could use a more efficient strategy and 
place their stop just above today's highs ($36.63).  After all, if 
CLS can rally above the highs on very negative sector news then 
bears may want to look at a different stock to short.  Very short-
term traders are going to want to look for the exits if CLS 
approaches $34 while the rest of us are still looking for a profit 
target near $32.

Picked on March 13th at $37.98
Gain since picked:       +2.13
Earnings Date         04/17/02 (unconfirmed)


Check Point Software - CHKP - cls: 32.81 chg: +2.63 stop: 34.15*new*

If you missed your chance to short CHKP at $34 on Tuesday you may 
get your chance again real soon.  Shares lost about 8.4% on 
Wednesday when fellow software security company Versign (VRSN) was 
hammered for a 9% loss over revealing details in their 10Q.  The 
story uncovered news that VRSN had recognized some $38 million in 
barter revenue, or about 3.8% of its total sales in 2001 yet they 
did not recognize these sales in 2000 (source:CBSMW).  The drop in 
VRSN's stock price is not surprising but it took the whole 
industry niche down with it and ISSX and CHKP both felt the 
selling pressure.  CHKP closed just above support at $30.  
Unfortunately for the bears, the stock immediately shot up again 
on Thursday, paused to tackle the $32 level and continued higher.  
If I was an optimistic bear (is that an oxymoron?) then I can look 
at today's move and see that CHKP merely filled the gap from 
Wednesday's drop and is ready to roll over again.  However, at 
this time we are not that optimistic and suspect that CHKP will 
retest $34 and possibly retest its 50-dma at $34.12.  Therefore we 
are going to lower our stop to just above the 50-dma and place it 
at $34.15.  The overall trend is still down and the MACD just 
produced a bearish crossover but the rebound in the Nasdaq 
actually awoke buyers in MSFT as well.  If the software giant can 
start making gains it might inspire bulls to gamble on other 
software stocks like CHKP, VRSN and ISSX.  

Picked on March 14th at $33.28
Gain since picked:       +0.47
Earnings Date         01/15/02 (confirmed)


Cisco Systems - CSCO - close: 16.49 change: +0.47 stop: see text

Shares of CSCO rebounded strongly this afternoon like most 
technology stocks but not before they pierced the $16 level this 
morning.  It was mainly a moral victory for the bears as the stock 
seemed bound to the $16 level of support before the afternoon 
rally commenced.  There seemed to be no lack for bad news on 
Thursday.  SLR's negative earnings report could have a bearish 
influence on large hardware producers like CSCO.  Also in the news 
were several reports that CSCO might lose another customer to 
bankruptcy.  Velocita, a fiber-optic network builder, appears to 
be on the verge of bankruptcy.  The company fired about 75% of its 
employees last month and Wall Street is speculating that CSCO 
could be left holding the bag.  CSCO's exposure would be $200 
million it invested in the company in addition to a $225 million 
in vendor financing that CSCO lent to Velocita to buy CSCO gear.  
CSCO spokesmen were quick to report that the networking giant had 
taken out reserves to cover the amount.  We doubt this will have 
any serious impact on their business since CSCO has about $7.5 
billion in cash or equivalents just sitting in the bank.  However, 
this is just one more straw on the back of a camel that is already 
looking somewhat burdened.  If you're not familiar with the fiber-
optic networking industry, the markets have already seen Global 
Crossing Ltd and 360networks Inc. go belly up and another company, 
Williams Communications Group is considering bankruptcy as well.  
If we can, we'll include a detailed chart showing how CSCO is 
still under its 50% retracement level and still inside its 
descending trading channel.  Whatever the case, until the stock 
trades through our trigger point at $15.90 we merely have to sit 
back and wait.  Once we are triggered we'll start with a stop at 

Picked on March xth at $xx.xx <- See text
Change since picked:    +0.00
Earnings Date        05/07/02 (unconfirmed)


Emulex Corp. - EMLX - close: 30.94 change: +2.20 stop: 32.31

Uh-oh!  EMLX had been moving in perfect unison with the view our 
crystal ball painted for us over the weekend.  That was until this 
afternoon.  The failed rally at $30 on Wednesday was exactly what 
we expected and shares remained under the $30 and 200-dma 
resistance level for most of Thursday until the last couple of 
hours when the rally in the tech sector was at its fullest.  In 
the news we noticed that a broker or two has come out with some 
bullish calls saying the valuations on EMLX are attractive but 
that is nothing new for the tech markets.  We do see a potential 
crossover in the MACD on the horizon but we are most disturbed by 
the close over $30.  Bears should be monitoring and/or adjusting 
their stops and we would not be looking for new entries points at 
this time.  If shares remain over $30 on Friday we might consider 
closing the play or adjust to a very tight stop.  We would look 
for potential resistance at $32 but that's awfully close to our 
current stop of $32.31.

Picked on March 14th at $29.25
Gain since picked:       -1.69
Earnings Date         01/22/02 (confirmed)

NB Closed Plays

  Closed Bearish Play

Brocade Communications - close: 25.73 change: +2.61 stop: 24.21

Was that a double-bottom?  It sure looks that way after BRCD added 
almost 11.3% today.  Shares had hovered above February lows near 
$22 over the past couple of days but really caught fire today.  A 
Bank of America analyst came out with positive comments on the 
stock based on overdone revenue concerns, and shorts may have been 
eager to cover their positions after the stock found new strength 
at the $22 level.  Although conservative traders could have taken 
their money off the table near that level we were willing to take 
a little more heat to see if BRCD could break below $22.  This 
morning the stock gapped up and marched higher throughout the day, 
but we were stopped out early at $24.21 for a 10% move.  We 
wouldn't be surprised to see BRCD bump from the top of its 
descending channel near $28 and head lower again, but for now 
we'll step aside while the bulls see how far they can run the 
stock price.

Picked on March 15th at $26.90
Gain since picked:       +2.69
Earnings Date         04/17/02 (unconfirmed)

Stock Bottom / Active Trader (AT) section

AT Play Updates

  Bullish Play Updates

Dole Food CO. - DOL - close: 30.33 change: +0.33 stop: 28.99

Finally, some decent upside movement from DOL.  Today's 1.10% gain 
outperformed the negative Dow Jones and pushed the stock to its 
highest close since March 5th.  Hopefully now that the stock has 
consolidated for the past two weeks we'll see another move higher.  
Traders may want to consider an entry if DOL closes above recent 
highs of $30.50.  If this occurs the next hurdle will be the 52-
week high at $31.46.  We're looking for a move above that level to 
clear the way for a move to our profit target at $34.  In late-
breaking news, after the bell today DOL announced a quarterly 
dividend of .15/share, to be paid on June 13, 2002.

Picked on March 1st at $30.94
Gain since picked:      -0.61
Earnings Date        01/31/02 (confirmed)


Kohls - KSS - close: 70.13 change: -0.78 stop: 66.75

The RLX.X retail index must've gotten dizzy after repeatedly 
butting its head on resistance at 980.  Its 1.15% loss today 
underperformed the broader market, while KSS traded in tandem with 
the sector and lost 1.1%.  Since moving over resistance at $70 
last week the stock has consolidated on decreasing volume.  Thus 
far we're encouraged by the way KSS has successfully tested this 
level - Its low today was exactly $70.  Traders may find it 
interesting to view a 5-minute (interval) chart on KSS.  Notice 
how the stock traded in a narrow range with support at $70?  
Whether or not this support holds may depend largely on what the 
RLX does.  Look for the index to find support at 960.  Extremely 
conservative traders who are feeling bullish on retail can take 
positions at current levels with a stop nestled near $69.75 after 
checking market direction first. 
Picked on March 15th at $ 70.50
Change since picked:      -0.37
Earnings Date          03/05/02 (confirmed)


Oxford Health - OHP - close: 41.53 change: +0.28 stop: 38.50

Broader market weakness this morning pulled the HMO.X healthcare 
index to within a point of support at 500 and then followed the 
Dow higher to finish with just a fractional loss.  OHP also traded 
lower but actually closed in the green with a 0.67% gain.  This 
marks the third day in a row that shares tagged a new all-time 
high.  The Premier Investor newsletter is currently up 7.7% on 
this play.  As long as the healthcare sector remains strong we 
feel confident that it can reach our profit target at $44.75.  
Intraday weakness down to the $41 level could be used as an entry 
point, while aggressive traders could use a move over today's high 
of $41.64.  Editor's note: nothing moves in a straight line.  So 
if you don't feel like chasing OHP odds are good it could produce 
a 3% to 5% pull back at any time.  We recommend patience if your 
risk tolerance suggests a lower entry point.  Fortunately for 
traders currently in the play the stock has not been that volatile 
over the last few weeks of March.

Picked on March 8th at $38.55
Gain since picked       +2.98
Earnings Date        02/05/02 (confirmed)


Payless Shoesource - PSS - close: 62.29 change: -0.72 stop: 58.75

As mentioned above, retailers took some heat today after the 
retail index (RLX) failed to break above resistance.  PSS appears 
to have its own resistance overhead near $65 and has spent the 
last two days pulling back from that level.  There hasn't been 
much conviction behind the selling - Volume today was 113K versus 
the average of 147K, and yesterday's volume was just over half as 
much as today's.  Watch for support to emerge near $61.50 - 
$62.00.  New entries could be considered on a bounce from this 
level.  If shares move higher without any additional pullback be 
sure to first confirm that the RLX has broken over resistance at 
980 before jumping on.  An event for the group was NKE's earnings 
announcement today.  Revenues weren't so hot with only a 4.2% gain 
but profits grew by 30%.  This might produce some positive 
influence for the industry but unfortunately NKE is seeing a "sell 
the news" effect in the after hours market.  If this negativity 
continues tomorrow, then PSS might fall closer to the $60 to $61 

Picked on March 15th at $61.74
Change since picked:     +0.55
Earnings Date         02/22/02 (confirmed)

High Risk / High Reward (HR) section

HR Play Updates

  Bullish Play Updates

Hartford Financial Svc - HIG - cls: 66.65 chg: -0.19 stop: 64.95*new*

HIG continues to trade in a narrow, albeit slightly-widening 
range.  Today's trading saw a break below recent support at $67 as 
shares lost 0.28% on moderate volume.  If we get a more 
substantial pullback, look for support at the 50-dma (roughly 
$65.25).  HIG bounced sharply from this dma twice in the past two 
weeks.  One of the smaller brokerages downgraded several insurance 
companies today, including heavy-hitters PGR and ALL.  However, we 
didn't see much of a reaction to it.  Actually, PGR hit a new 
high.  Meanwhile it appears investors may have HIG trading 
sideways as they digest the impact of the company's current 
litigation issues.  In the last couple of days we've noticed news 
reports that HIG and one of their affiliates might be at risk to 
losing a recent court case to Bancorp Services.  HIG is expecting 
a potential $11 million impact in the Q1 at this time from the 
case but it could see additional costs in the future.  We would be 
cautious and take a wait and see approach.  If HIG can start to 
gain some positive momentum and close above $68 we might turn more 
optimistic again.  We are going to bump up our stop half a point 
to $64.95.  If shares break the 50-dma we'll probably want out.

Picked on March 13th at $65.74
Change since picked:     +0.91
Earnings Date         01/28/02 (confirmed)


Providian Financial - PVN - cls: 6.15 chg: +0.25 stop: 5.39 *new*

This high-risk play looks like it could be ready to move to the
upside.  We speculated in the most recent update that PVN seemed 
to be coiling near the $6.00 level.  Shares tacked on 4.2% today 
and are now just $0.15 from setting a new near-term high at $6.30.  
The daily stochastics took a dip but are curling higher toward the 
upper range.  Traders can target entries if the stock moves above 
this level.  Alternatively, you could wait to see if shares dip 
back to the $5.70 to $5.85 level, which has supported the stock 
this week.  Based on the fact that we are currently profitable on
this play, we're going to move our stop up to $5.39.  This allows 
us some breathing room, but ensures that we won't get caught in a 
failed rally.  On a related note, we like how PVN has outperformed 
the BIX.X banks index, which dropped yesterday after failing to 
conquer resistance at 700.  It's possible that PVN's appearance at 
the Banc of America Financial Services Conference on Monday, March 
25th might produce some positive press for the stock.  
Unfortunately, some late breaking news out tonight might also 
depress it.  A late night news article showed up and PVN has 
agreed to pay $38M to settle a 1999 shareholder lawsuit.  The 
settlement still needs a judge's approval.  While this settlement 
doesn't handle all the shareholder lawsuits outstanding the 
company does not expect it to affect its current turnaround 
efforts as the entire $38M is covered by insurance (source: AP).  
Traders definitely want to take a step back if you have yet to 
make a play and see how the market reacts tomorrow.

Picked on March 8th at $5.71
Change since picked:   +0.44
Earnings Date       02/07/02 (confirmed)

  Bearish Play Updates

Adelphia Comm. - ADLAC - close: 21.81 change: +0.17 stop: 22.85 *new*

Today was looking bright for the ADLAC bears until the NASDAQ 
rally rained on our parade.  Shares pegged a low of $20.81 but 
added a full point to that amount before the day was over.  
Something we noticed today was the way COX bounced from its 50-
dma and helped lead ADLAC and the group higher.  When fine-tuning 
entry points it might be a good idea to take a look at how COX is 
performing.  With this in mind, aggressive traders could consider 
an entry if the stock rolls over tomorrow at today's high near 
$22.  In order to manage risk we're tightening our stop tonight 
to $22.85, which is just above the Mon/Tues/Wednesday highs for 
the week.  This should protect a gain of almost 5%.  Note:  Last 
night we mistakenly gave April 27th as the date for ADLAC's Q4 
conference call.  As mentioned in an earlier update, this will 
actually occur next Wednesday, on March 27th.  Perhaps curious 
reporters will take this opportunity to shine a glaring spotlight 
on the company's questionable cable swap with CMCSK again.

Picked on March 12th at $23.99
Gain since picked:       +2.18
Earnings Date         03/29/02 (unconfirmed)

  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  

DUK     Duke Energy Corp           38.03     +1.57
CIN     Cinergy Corp               35.29     +0.76
AYE     Allegheny Energy Inc       39.40     +1.65
PWN     Pinnacle West Capital      44.38     +1.03
GAS     Nicor Inc                  45.05     +0.98

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

LGND    Ligand Pharmaceuticals     18.05     +1.53
GNTA    Genta Inc                  18.25     +1.20
HLYW    Hollywood Entertainment    17.70     +1.24
UCI     UICI                       16.65     +1.10
TREE    Lendingtree Inc            12.15     +1.15

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

PGN     Progress Energy            49.10     +1.57
AYE     Allegheny Energy Inc       39.40     +1.65
MEG     Media General              62.20     +3.60
TKR     Timken Co                  23.65     +1.58
HYSL    Hyperion Solutions         26.47     +1.99

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

IR      Ingersoll-Rand Ltd         51.22     -2.16
WAG     Waters Corp                29.20     -1.85
MYG     Maytag Corp                42.63     -1.81
LEN     Lennar Corp                51.12     -1.50

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

SDS     Sungard Data Systems       33.15     -1.58
DOV     Dover Corp                 41.95     -1.09
ORI     Old Republic Intl          31.17     -0.43
WBST    Webster Financial Corp     36.47     -0.43

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