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Daily Newsletter, Tuesday, 07/16/2002

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PremierInvestor.net Newsletter                 Tuesday 07-16-2002
                                                   section 1 of 2
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In section one:

Market Wrap:      Where Do I Begin?
Market Sentiment: You Had Me, Then You Lost Me
Play-of-the-Day:  Envisioning A Selloff


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U.S. Market Numbers
-----------------------------------------------------------------
MARKET WRAP  (view in courier font for table alignment)
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      07-16-2002           High     Low     Volume Advance/Decline
DJIA     8473.11 -166.10  8635.66  8406.45 2.11 bln   1211/1881
NASDAQ   1375.26 -  7.40  1407.59  1364.88 2.37 bln   1699/1766
S&P 100   448.81 -  8.36   457.90   446.70   Totals   2910/3647
S&P 500   900.94 - 16.99   918.65   897.13 
RUS 2000  407.27 -  1.81   413.48   404.74 
DJ TRANS 2434.10 +   .30  2643.15  2652.64   
VIX        42.05 +  2.75    42.85    39.95   
VXN        67.94 +  0.09    69.38    66.57
Total UpVol 1,659.3M
Total DnVol 3,011.8M
52wk Highs   65
52wk Lows   407
TRIN        1.10
PUT/CALL     .76
-----------------------------------------------------------------

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

Where do I begin?

The markets just couldn't hold their gains into the close as the 
Dow Industrials finished down 166 points (-1.92) despite attempts 
to claw back to unchanged levels with just 1-hour before the 
close.  The broader S&P 500 Index (SPX.X) also gave up on its 
attempt at unchanged levels, falling 17 points on the session 
(-1.85%) to close at 900.  The NASDAQ Composite (COMPX), which 
managed to trade in positive territory for the bulk of today's 
session gave up earlier gains to finish down 7 points (-0.53%) at 
1,374 on what looked to be a precautionary "stoppage of buying" 
ahead of tonight's earnings from Intel (NASDAQ:INTC) $18.36 
-3.97%.

The day started out with some economic data showing stronger than 
expected levels of industrial production in the previously 
reported month of May and just completed month of June.  
Industrial production for May was revised higher at 0.4% from the 
previously reported 0.2% gain, and June's 0.8% gain was much 
stronger than economist's forecast for a 0.4% increase.

This morning's production data and increases found helped calm 
some fears brought on by yesterday's May inventories report, 
which showed a 0.2% rise in inventories.  The "calming" came from 
the thought that it might be "OK" for inventories to increase 
slightly for the month of May if the same months production 
increased at a revised higher 0.4% level.

Trader's/Investor's can expect for next month's inventories data 
to get special attention to see if the economy is showing enough 
improvement to create the demand needed to eat up June's 0.8% 
(preliminary) production output.

The rate of capacity utilization for total industry rose to 76.1% 
(consensus was 75.8%) from 75.6% in May as factories opened up 
more production lines.  Within the capacity utilization category, 
manufacturing posted a 0.9% increase, while mining rose 0.7%, and 
utilities jumped 4.8% to bring on capacity due to a hot summer in 
many regions of the U.S.

Industrial production reached its highest levels since May 2001, 
but fell 4.5% short of its June 2000 peak.  Production enjoyed 
its largest single-month increase since October 1999.

Since June of 2001, industrial production has risen a modest 
0.2%, while capacity utilization has grown 1%.

Ken Mayland, an economist with ClearView Economics said, "The 
inflation-adjusted, gross value of industrial products, a seldom-
followed production statistic, expanded at a 2.6% annualized rate 
during the April-June period, as compared to the first quarter's 
2.8% annualized rate."  Mr. Mayland added "Rising output and 
operating rates should help manufacturers restore profitability 
lost during the 2001 factor-based recession."

Largest single-month increase since October 1999?

In a rather "perplexing" market environment when everyone is 
trying to get a grasp on just where the economy is headed, then 
today's comments from the Federal Reserve regarding "Production 
enjoyed it largest single-month increase since October 1999" may 
be important.  

Let's quickly revisit the bar chart of the Morgan Stanley 
Cyclical Index (CYC.X) 492.05 -2.59%, which in recent months 
hasn't traded anything like an economic bull would have wanted.  
We can look back at what the MARKET was saying about this group 
of "economically sensitive" and "industrial production" sensitive 
stocks were doing and did after October 1999 and compare to what 
we see now and perhaps the future.  From here, we either look for 
similarity or divergence.  

I last talked about the CYC.X in the July 11th wrap when this 
index was trading 516.96 and current trading has the cyclicals 
down roughly -4.8% in three trading sessions, compared to the S&P 
500's (SPX.X) -2.84% decline during the same three session.

I don't know about you, but I can't wait another month to get a 
read on industrial production to see how the economy is doing at 
the industrial level.  Maybe a break back above the 505 level in 
the CYC.X will give hint that the MARKET believes the economy is 
OK and there's still some building demand to have industrial 
production exceeding the October 1999 gains.  For now, caution is 
still advised for this group and perhaps many technology 
companies that count on this group for some IT-type spending.

Morgan Stanley Cyclical Index - Weekly Intervals




The Morgan Stanley Cyclical Index (CYC.X) 492.05 -2.59% rallied 
to a session high of 505.16 (right near our 50% retracement) but 
looks to have found willing sellers despite a stronger-than 
expected Industrial Production report.  We can make some 
comparisons between current trading and that found back in 
October 1999 with what appears to have been a near-term top, 
followed by extensive profit taking in the cyclicals, only to 
recovery weeks later on strong industrial production data.

I will also note here that the CYC.X is down about 9% from its 
June 28 2001 close, which could be compared to the Fed's quoting 
that industrial production has risen a modest 0.2% since June of 
2001.  On May 23 2002 (about 1.5 months ago) the CYC.X was 
trading 592 and that would have been darned close to a 9% gain 
from the June 28 close of 542.  While not an "exact" match, price 
action in this group seems to be doing a pretty good job of 
matching industrial production numbers.  Analysis right now is 
that market action continues to reflect some type of future 
slowing.

While the CYC.X is still bullish relative to their September 
lows, which the NASDAQ Composite and S&P 500 Index (SPX.X) 
violated three weeks ago, one of two things is evident in the 
Cyclicals.  

Either bulls have simply suffered enough pain in other areas of 
the market in recent months and have thrown in the towel on the 
cyclicals and locked in some gains on fears of giving back the 
September lows, or the MARKET simply doesn't see much more upside 
to an industrial based economic recovery.

As such, I'll take note of today's stronger than expected 
production data which still holds some bullish thoughts as it 
relates to a good old "grass roots" industrial-based economic 
recovery, but I'd want to see a sustainable move above the 505 
level.  With market sentiment still negative, I'm not ruling out 
the still to be achieved bearish vertical count from the point 
and figure chart at 480 and/or retracement support at 477.

If the MARKET like the Industrial Production numbers, then demand 
should come into the group and eat up the supply from "emotional" 
sellers that just want to preserve some gains, or cut losses 
small after watching other parts of their portfolios decline in 
recent months.

I still feel the "lack" of bullishness from the deeper cyclicals 
on a day-by-day basis still hints that short-term rallies we see 
in some of the technology sectors is simply short-covering 
related, and not really indicative of a more sustainable move.

I want to see some type of CONFIRMATION or true bullishness for 
an economically sensitive group at the industrial level to get 
any type of thought of a sustainable recovery in technology 
stocks.

The Dow Transportation Average (TRAN) 2,434 +0.01% edged up today 
after achieving and then exceeding its bearish vertical count of 
2,380 yesterday when it trade a low of 2,342 ($10 box scale on 
p/f chart).

The Forest/Paper Products Index ($FPP.X) 322.51 -1.78% fell as 
low as 298.94 today after giving a glaring sell signal early in 
the month with a triple-bottom sell signal at 345.  The resulting 
column of O (supply) currently has the bearish vertical count at 
230 and becomes rather alarming to downside risk in the market if 
that bearish count were to ever come to fruition.  Again, this 
sector may have experienced "towel throwing" type selling in the 
last week as investors tried to protect what gains were left in 
their portfolios, but does show just how negative sentiment is 
toward stocks.

Let's talk foreign sentiment toward the US Dollar

There didn't appear to be anything all that "revealing" in Fed 
Chairman Alan Greenspan's testimony today.  It was more of the 
same as it relates to a slow recovery where the economy continues 
to show signs of strength that should bode well longer-term.

However, the US Dollar Index (dx00y) $104.25 -0.4% dropped to 
another 52-week low (three day's in a row now) and hints that 
foreign investors continue to sell US dollar assets and 
repatriate their cash to their local currency.

That action combined with a strong round of selling in the US 
Treasury bond markets, especially in the longer-term 30-year 
($TYX.X) 5.475% and 10-year ($TNX.X) 4.713% becomes concerning.

CNBC commentators duly noted the DIVERGENCE found compared to the 
past, when selling in Treasuries had seen a rise in the broader 
equity markets.  

But as alerted to in past commentary, I felt that equity bulls 
needed to see a strengthening US dollar, combined with selling in 
Treasuries to tell us that the money freed up from selling 
Treasuries would be staying here in the U.S. and not flowing back 
overseas.

Today's further weakening in the US Dollar Index (dx00y) really 
depicts a foreign investor that just doesn't perceive "value" in 
the U.S. right now.  While today's selling in U.S. Treasuries was 
also commented on by bond traders that there just wasn't much 
"reward" to be found in the lower Treasury YIELDS, today's 
continued weakness in the US Dollar hints that foreign investors 
still perceive some "higher level of risk" in the U.S. and that 
made it difficult for stocks to hold gains.

The euro, Japanese yen and British pound all traded new relative 
highs against the U.S. dollar again today.

December Gold futures (gc02z) $319.80 -0.74% traded off 
marginally and didn't display a surge higher that may have 
indicated any type of "panic/flee to gold" move in the underlying 
commodity.  

Seesaw action in after-hours when Intel reported earnings

Stock traders (bullish and bearish) had a close eye on tonight's 
earnings from semiconductor giant Intel (NASDAQ:INTC) $18.36 -
3.97.  

After the close, Intel (INTC) reported GAAP earnings of $0.07 a 
share, and pro-forma earnings of $0.10 a share, which missed 
analysts' estimates of $0.11.  

Once again, there was some confusion if analysts' estimates for 
$0.11 were for GAAP earnings (which include one-time charges), or 
pro-forma earnings that excluded one-time charges.  After a 
somewhat volatile after-hours session that found the stock 
trading +/- $0.50 from its close, it appears that analysts' 
estimates were based on "excluding items" and previous guidance 
given to analysts of $0.11 a share (by Intel) did not include 
one-time charges.  As such, that would have had Intel reporting 
quarterly earnings of $0.10 a share compared to analysts' 
estimates of $0.11.

As I write, last trade in after-hours on Intel (INTC) was $18.62, 
which would represent a +1.4% gain from where the stock finished 
the regular session.

GAAP earnings states as $0.07 a share, which included a $106 
million charge to the cost of sales related to the decision to 
wind down Intel Online Services, along with a $112 million write-
off of acquired intangibles, primarily related to the Xircom PC 
cards for wireline networking.

Intel's Q2 revenues were $446 million, which was down 52% 
sequentially, but up 128% year-over-year.  Revenues were inline 
with analysts' expectations.

CEO Craig Barret said, "In a tough environment, we continued to 
execute well.  Our investments in technology and manufacturing 
are delivering processors with clear performance leadership, 
resulting in market segment share gains across the board.  We 
also saw growth in our communications businesses, led by solid 
flash memory revenue and share growth.  Although an overall 
industry recovery has been slow to materialize, we still expect a 
modest seasonal increase in demand in the second half.  In this 
environment, our strategy remains the same: Focus on execution, 
take prudent cost cutting measures, and invest to further improve 
our competitive position and long-term growth prospects."

On the company's conference call, Intel noted that gross-margins 
(profit before expenses expressed as a percentage of sales) would 
have been 49% without the charges for closing it online services 
division, which was inline with Intel's mid-quarter guidance 
given on June 6th, when the stock was trading $27, before getting 
hit to $22 the following day.

Intel gave a brief forecast on revenues for its Q3, saying it 
expected revenues to be between $6.3 billion and $6.9 billion 
(consensus was $6.71 billion).  While the company did not give an 
EPS estimate, analysts that worked the numbers felt the revenue 
guidance put EPS for Q3 at $0.13 a share, which would be just 
about a penny below consensus of $0.14 a share.

Capital expenditures for 2002 is expected to be between $5.0 
billion and $5.2 billion, which is lower than the previously 
expected $5.5 billion.  The company said its capex cuts would 
come from scaling back in its office building and lab equipment, 
but not at the expense of fabrication equipment.

The capex news had shares of Applied Materials (NASDAQ:AMAT) 
trading down 9-cents from their 04:00 close of $18.40 -5.15%, 
KLA-Tencor (NASDAQ:KLAC)* gaining 52-cents to their $44.74 -3.36% 
close and Novellus (NASDAQ:NVLS) $32.09 -2.58% edging up 24-cents 
in after-hours trading.

*KLA-Tencor (KLAC) upgraded by UBS Warburg to "buy" from "hold" 
after tonight's close.

Intel management also said it would cut approximately 4,000 jobs 
and expected to achieve the bulk of that mostly through natural 
attrition.  

Late night alert

I was just about to "wrap things up" when my trade station 
started blinking at me.  A couple of days ago I set an UPSIDE 
alert on the September Light, Sweet Crude Oil futures (cl02u) at 
$28/barrel and that was triggered late this evening with a trade 
at $28.05.

Tonight's American Petroleum Institute (API) report showed that 
U.S. crude inventories fell 4.031 million barrels and this news 
most likely driving the buying in the crude futures late this 
evening.

September Crude Oil Futures - Daily Interval




While stock investors have been selling just about any and every 
stock in recent weeks INCLUDING energy stocks that derive their 
revenues from oil production, the break to new highs in the 
September crude futures may put some energy bulls on heightened 
alert.

PremierInvestor.net recently added shares of Apache (NYSE:APA) 
$51.29 -1.98% to the bullish play list with a bullish trigger at 
$52.86 as the stock trades well off its 52-week high set on May 
3rd at $60.09, with the stock hovering right at a trending higher 
200-day MA at $50.75.

There may be some stock/commodity disconnect between energy 
stocks and the underlying commodity that an equity bull might be 
able to benefit from near-term.

Hey!  Not every cent of cash that came out of the Treasury market 
went back overseas today.  Some of it may flow to some of the 
energy producers with Crude Oil breaking to new highs while oil 
producers experienced a pullback.

Jeff Bailey
Senior Market Technician
PremierInvestor.net


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

You Had Me, Then You Lost Me
By Steve Price

   This is certainly how the markets responded to Alan 
Greenspan's testimony today.  A weak open turned into rally, 
albeit still in negative territory, but alas, it only lasted a 
short while before the bears took over.  Today was the seventh 
straight drop for the Dow Jones, which came within a few points 
of its September closing lows yesterday, only to stage a furious 
rally.  Today, however, was a different story.  The Dow dropped 
166.08 points to 8,473.11, while the Nasdaq held firmer, but 
still lost 7.36 points to 1375.26, and the S&P 500 matched the 
Dow's 1.9% drop to 900.94.

   Just before the open the Federal Reserve released figures, 
which showed a 0.8 percent rise in industrial production last 
month and a 0.5 percent increase in capacity utilization from a 
revised 75.6 percent in May, to 76.1 percent in June.  In his 
testimony, Greenspan blamed corporate misdeeds for undermining 
public confidence, and endorsed strong measures to police and 
punish corporate fraud.  The Fed Chairman attempted to pump us up 
by stating the fundamentals were in place for a return to 
sustained growth. Unfortunately, the only things that grew during 
the day were doubts, as the market awaited results from Intel. 
The Semiconductor Index ($SOX.X) was off only marginally as it 
maintained its holding pattern ahead of the earnings release.

  Better than expected earnings from GM, which beat estimates by 
a penny, and Johnson and Johnson, which came out 2 cents ahead of 
expectations did little to prop up the market.  After the close, 
Intel released earnings, which missed estimates by two cents per 
share, however was only punished momentarily before trading up 
0.26 to $18.62, Their announcement that they would be cutting 
4,000 jobs seem to temper comments that guided expectations 
downward in the next quarter due to shrinking margins.  It still 
doesn't sound very positive.  With IBM set to release earnings 
tomorrow, it should be interesting to see whether similar bad 
news pushes the market south, or whether investors are as 
forgiving as they seem to be with Intel.  

   This willingness to forgive bad news in the tech sector is 
interesting, given the current difference in bullish percent 
between the Nasdaq 100($BPNDX), which is in full bull confirmed 
status, and the S&P 500 ($BPSPX), which is still in bear 
confirmed status.  The S&P Bullish Percent of 22 is in fact 
approaching similar risk to post September 11th levels of 16, 
while the OEX Bullish Percent is beyond the September 11th levels 
of 16, having reached 14.  The Nasdaq, however, returned from its 
low of 8 percent all the way up to 28 percent and is approaching 
the 30 level, beyond where it will no longer be considered 
oversold.  This combined with the fact that the QQQ has just 
reached its bearish vertical count on the point and figure chart 
demonstrates a crucial point in the market.  Is the fact that 
investors are forgiving the bad news in the tech sector a sign of 
bullishness to come?  Or is it likely that investors ignoring 
good news from the S&P stocks and driving the market lower 
signals a change in which sector will drive the market in the 
future?



-----------------------------------------------------------------

Market Averages

DJIA ($INDU)

52-week High: 11350
52-week Low :  8062
Current     :  8473

Moving Averages:
(Simple)

 10-dma: 8922
 50-dma: 9595
200-dma: 9823

S&P 500 ($SPX)

52-week High: 1316
52-week Low :  900
Current     :  900

Moving Averages:
(Simple)

 10-dma:  940
 50-dma: 1023
200-dma: 1096

Nasdaq-100 ($NDX)

52-week High: 2071
52-week Low :  946
Current     : 1011

Moving Averages:
(Simple)

 10-dma: 1001
 50-dma: 1137
200-dma: 1388


Semiconductor Index ($SOX.X)

The semiconductor index has been in a holding pattern since the 
beginning of the month.  The big announcements are here, though, 
and it should be an interesting week, beginning with Intel 
missing their earnings after today's close.

52-week High: dna
52-week Low : dna
Current     : 386.41

Moving Averages:
(Simple)

 10-dma: 372
 50-dma: 443
200-dma: 509



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Market Volatility

The VIX has closed over 40 for the first time since last 
September.  Today it closed at 42.05, after reaching a high of 
42.85.  Don't expect to see the VIX drop very far until some of 
the uncertainty of this week's earnings is behind us.  The 
markets continue to flirt with big down moves, and after Monday's 
400+ point swing, volatility should remain elevated until we find 
a new range in the broader markets.


CBOE Market Volatility Index (VIX) - 42.05 +2.75
Nasdaq-100 Volatility Index  (VXN) - 67.06 -0.79

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          Put/Call Ratio  Call Volume   Put Volume
Total          0.76        835,931       636,130
Equity Only    0.67        621,786       418,884
OEX            0.54         69,790        37,799
QQQ            0.53        105,139        55,847

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Bullish Percent Data

           Current   Change   Status
NYSE          37      - 4     Bull Correction
NASDAQ-100    29      + 8     Bull Confirmed
DOW           10      - 13    Bear Confirmed
S&P 500       22      - 4     Bear Confirmed
S&P 100       14      - 9     Bear 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  1.12
10-Day Arms Index  1.29
21-Day Arms Index  1.39
55-Day Arms Index  1.37

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 
points.

-----------------------------------------------------------------

Market Internals

        Advancers     Decliners
NYSE       1259          1881
NASDAQ     1667          1695

        New Highs      New Lows
NYSE        31            216
NASDAQ      71            178

        Volume (in millions)
NYSE     2,133
NASDAQ   1,978

-----------------------------------------------------------------

Commitments Of Traders Report: 06/25/02

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

Commercials gave back only 700 of their net long contracts, a 
small percentage change, maintaining a bearish position.  Small 
Traders added back a couple of thousand contracts to their long 
position.

Commercials   Long      Short      Net     % Of OI 
06/18/02      437,530   487,956   (50,426)   (5.4%)
06/25/02      378,214   438,775   (60,561)   (7.4%)
07/09/02      396,321   456,164   (59,843)   (7.0%)

Most bearish reading of the year: (111,956) -   3/6/02
Most bullish reading of the year: ( 36,481) - 10/16/01

Small Traders Long      Short      Net     % of OI
06/18/02      181,178    88,517    92,661     34.3%
06/25/02      134,380    62,792    71,588     36.3%
07/09/02      145,017    71,402    73,615     34.0%

Most bearish reading of the year:  36,513 - 5/01/01
Most bullish reading of the year: 114,510 - 3/26/02
 
NASDAQ-100


Commercials added only slightly to their short position, 
maintaining the status quo. Small Traders reduced their long 
position by over 40%.

Commercials   Long      Short      Net     % of OI 
06/18/02       54,816     49,169     5,647    5.4%
06/25/02       27,238     35,926    (8,688) (13.8%)
07/09/02       31,227     39,592    (8,725) (12.3%)

Most bearish reading of the year: (15,521) -  3/13/02
Most bullish reading of the year:   9,068  - 06/11/02

Small Traders  Long     Short      Net     % of OI
06/18/02       20,883    29,153    (8,270)   (16.5%)
06/25/02       14,749     7,570     7,179     32.2%
07/09/02       12,520     8,348     4,175     20.0%

Most bearish reading of the year: (10,769) - 06/11/02
Most bullish reading of the year:   8,460  -  3/13/02

DOW JONES INDUSTRIAL

Dow Commercials brought their long positions back up to their 
previous levels, adding almost 2,000 contracts. Small Traders 
maintained their previous bullish levels. 

Commercials   Long      Short      Net     % of OI
06/18/02       25,995    19,115    6,880     15.1%
06/25/02       18,016    13,255    4,761     15.2%
07/09/02       20,761    14,122    6,639     19.0%

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
06/18/02        5,379    11,813    (6,434)   (37.2%)
06/25/02        6,414     6,597       183     1.40% 
07/09/02        6,831     6,623       208     1.50%

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

-----------------------------------------------------------------


===============
PLAY-of-the-Day  ((new BEARISH tech play))
===============

InVision Tech. - INVN - close: 27.07 change: -0.08 stop: *text*

Company Description:
InVision Technologies develops, manufactures, markets and 
supports explosive detection systems based on advanced computed 
tomography technology for civil aviation security. InVision's 
wholly owned subsidiary, Quantum Magnetics, develops weapons, 
narcotics, explosives and other detection systems based on 
quadrupole resonance patents licensed from the Naval Research 
Laboratory and on other proprietary magnetic sensing 
technologies. (source: company press release)

Why We Like It:
InVision is one of the few companies that actually benefited from 
the 9/11 attacks.  Demand for the company's explosive detection 
technology soared as the FAA scrambled to make their baggage 
checking procedures more secure.  Accordingly, shares of INVN saw 
a meteoric rise from $3 to $50 in just half a year.  The trading 
in recent months has been relatively tame, with shares 
gravitating towards the $20-$25 region.  Lately it's been getting 
more interesting.  Shares gained nearly 10% on Monday after the 
company announced that it anticipates Q2 earnings will come in at 
least 15 cents higher than the consensus estimate of 33 
cents/shares.  Granted, that sounds pretty impressive.  Investors 
who buy on fundamental strength probably can't wait to snap up 
shares at current levels.  

But wait...There's a catch!  The U.S. government does not have an 
unlimited budget to spend on homeland defense.  Recent reports 
have outlined the fact that there simply won't be enough money in 
Uncle Sam's wallet to pay for all the proposed projects.  What 
this means is that defense-related stocks are suddenly looking 
overpriced.  Investors had priced in future government spending 
that may not materialize.  The declining action in the $DFX.X 
defense index reflects these concerns.  INVN, however, has not 
seen a similar downtrend.  We suspect this relative strength can 
in part, be attributed to the stock's recent addition to the 
Russell 2000.  That artificial buying pressure will disappear now 
that the index reshuffling is complete.

Our technical analysis also paints a short-term bearish picture 
for INVN.  The stock is currently resting on the top of the 
ascending channel, which has dictated price action over the past 
three months.  This level is bolstered by the 200-dma at $27.07.  
We think today's spike outside of the channel and subsequent 
close under the 200-dma is indicative of a near-term top.  The 
stock certainly appears overextended after rising 25% in just 4 
sessions.  By shorting INVN under today's low of $26.48 (our 
official trigger to go short), we hope to capture a move down to 
the 50-dma near $22.50.  The most formidable obstacle will be 
previous resistance/psychological resistance at $25.  We won't 
hesitate to challenge our play with a very tight stop if shares 
bounce from this area.  Our initial stop (if the stock moves 
below $26.48), will be set at $28.59, just above today's high.  

Picked on July xxth at $xx.xx <- see text
Change since picked:    +0.00
Earnings Date        07/23/02 (confirmed)
 






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PremierInvestor.net Newsletter                  Tuesday 07-16-2002
                                                    section 2 of 2
Copyright  2001, All rights reserved.
Redistribution in any form is strictly prohibited.

The entire newsletter is best viewed in COURIER 10 for alignment
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In section two:

Net Bulls
  New Bearish Plays:     INVN

Stock Bottom / Active Trader
  New Bearish Plays:     FRK, THO
  Bullish Play Updates:  APA, PHM
  Bearish Play Updates:  BUD, FLR, ITT, SAH, XL

High Risk/Reward
  New Bearish Plays:     NPSP
  Bullish Play Updates:  NVDA

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



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

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

  -----------------
  New Bearish Plays
  -----------------

InVision Tech. - INVN - close: 27.07 change: -0.08 stop: *text*

Company Description:
InVision Technologies develops, manufactures, markets and 
supports explosive detection systems based on advanced computed 
tomography technology for civil aviation security. InVision's 
wholly owned subsidiary, Quantum Magnetics, develops weapons, 
narcotics, explosives and other detection systems based on 
quadrupole resonance patents licensed from the Naval Research 
Laboratory and on other proprietary magnetic sensing 
technologies. (source: company press release)

Why We Like It:
InVision is one of the few companies that actually benefited from 
the 9/11 attacks.  Demand for the company's explosive detection 
technology soared as the FAA scrambled to make their baggage 
checking procedures more secure.  Accordingly, shares of INVN saw 
a meteoric rise from $3 to $50 in just half a year.  The trading 
in recent months has been relatively tame, with shares 
gravitating towards the $20-$25 region.  Lately it's been getting 
more interesting.  Shares gained nearly 10% on Monday after the 
company announced that it anticipates Q2 earnings will come in at 
least 15 cents higher than the consensus estimate of 33 
cents/shares.  Granted, that sounds pretty impressive.  Investors 
who buy on fundamental strength probably can't wait to snap up 
shares at current levels.  

But wait...There's a catch!  The U.S. government does not have an 
unlimited budget to spend on homeland defense.  Recent reports 
have outlined the fact that there simply won't be enough money in 
Uncle Sam's wallet to pay for all the proposed projects.  What 
this means is that defense-related stocks are suddenly looking 
overpriced.  Investors had priced in future government spending 
that may not materialize.  The declining action in the $DFX.X 
defense index reflects these concerns.  INVN, however, has not 
seen a similar downtrend.  We suspect this relative strength can 
in part, be attributed to the stock's recent addition to the 
Russell 2000.  That artificial buying pressure will disappear now 
that the index reshuffling is complete.

Our technical analysis also paints a short-term bearish picture 
for INVN.  The stock is currently resting on the top of the 
ascending channel, which has dictated price action over the past 
three months.  This level is bolstered by the 200-dma at $27.07.  
We think today's spike outside of the channel and subsequent 
close under the 200-dma is indicative of a near-term top.  The 
stock certainly appears overextended after rising 25% in just 4 
sessions.  By shorting INVN under today's low of $26.48 (our 
official trigger to go short), we hope to capture a move down to 
the 50-dma near $22.50.  The most formidable obstacle will be 
previous resistance/psychological resistance at $25.  We won't 
hesitate to challenge our play with a very tight stop if shares 
bounce from this area.  Our initial stop (if the stock moves 
below $26.48), will be set at $28.59, just above today's high.  

Picked on July xxth at $xx.xx <- see text
Change since picked:    +0.00
Earnings Date        07/23/02 (confirmed)
 





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

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

  -----------------
  New Bearish Plays
  -----------------

Florida Rock Inc. - FRK - close: 33.02 change: -1.51 stop: *text*

Company Description:
Florida Rock Industries, Inc. is one of the nation's leading 
producers of construction aggregates, a major provider of ready-
mixed concrete and concrete products in the Southeastern and Mid-
Atlantic States and a significant supplier of cement in Florida 
and Georgia. (source: company press release)

Why We Like It:
Since tracing a sloppy head-and-shoulders formation (daily chart) 
earlier this year, shares of FRK have traded with a distinctly 
bearish bias.  The selling briefly abated as the stock gravitated 
to its 200-dma, but that level was recently abandoned.  The 
downtrend accelerated today after Florida Rock announced that it 
expected Q3 earnings of 65-67 cents/share, similar to the 3Q 
results for 2001.  Analysts had been expecting a 70 cents a 
share. Investors frowned upon this news, as evidenced by the 
stock's high-volume 4.3% decline.  Shares fell below recent 
support in the $34-$35 region and closed at levels not seen since 
last December.  It's our belief that this breakdown will lead to 
more selling in the near-term.

Although the daily stochastics (5,3,3) are currently pinned at 
oversold levels, the recent bearish MACD crossover suggests more 
downside potential.  We're also encouraged by the rising volume 
over the past week.  Today's decline came on more than twice the 
daily average of 85K shares, which indicates that FRK is building 
downside momentum.  The point-and-figure chart is looking bearish 
as well, with FRK below bullish support and currently signaling a 
double-bottom breakdown.  In light of this technical weakness, 
we're expecting that shares will fall to the $30 region within 
the next few weeks.  If the recent trend continues, that level of 
psychological support could be reached in a matter of days.  Our 
official profit target will be located at $30.06.  However, this 
play will not be activated until FRX falls below today's low of 
$33.00.  Given the fact that shares closed two cents above this 
level, we wouldn't be surprised to be triggered at tomorrow's 
open.  Because this play is designed to capture a full-blow 
breakdown, we're going to use a tight stop of $34.11.  More 
aggressive traders could use a stop just above today's high at 
$35.10. 

Picked on July xxth at $xx.xx <- see text
Gain since picked:      +0.00
Earnings Date        08/07/02 (unconfirmed)
 



---

Thor Industries Inc. - THO - cls: 31.90 chg: -2.60 stop: 35.20

Company Description:
Thor Industries produces and sells a large variety of small and 
mid-size buses in the United States.  Thor Industries has many 
subsidiaries including: Airstream Inc, Dutchman Manufacturing 
Inc, Four Winds International Inc, Thor America, Komfort Corp, 
Aero Coach Inc, Citair Inc, and Thor California.

Why We Like It:
Thor Industries recently split 2 for 1 on July 9th; potentially 
setting up a post split depression for the stock... The post-
split strategy is explained in our SPLITS 101 article within the 
Stock Splits section of PremierInvestor.net.  We have included 
part of the educational split article here, to explain some of 
our strategy.  "Finally comes the Post-Split stage, the period 
that follows the split's execution. A depression in this phase is 
one of the most dependable moves of a stock split. Traders have 
already had several trading opportunities in the weeks leading up 
to the stock split; momentum players exit their positions, 
driving the stock price down."  If we examine the chart of THO, 
we will see that the stock is starting to encounter a post-split 
decline. Of course it could also see selling pressure as the 
stock has held up rather well and investors are selling their 
winners due to market weakness, not to mention the funds that are 
liquidating stocks to meet redemptions.  We can't say this is 
what is happening to THO but anything up 100% in 2002 is bound to 
be due for some profit taking. THO broke down from its 
consolidation, and is now touching the bottom of its channel.  
The weekly chart displays Stochastics falling below the upper 
line, hopefully indicating substantial selling on the horizon.  
On the daily chart (below), we see that THO has also fallen 
underneath the 50-DAy MA, and is also starting to see weakness in 
the daily Stochastics as well.  Drawing an ascending trend line 
on our chart, we see that ascending support lies beneath the 
current price of 31.90, at around $28-29.00.  Our anticipated 
target for THO is the 200-Day MA at 24.50.  However, to make sure 
that we are able to exit the trade without institutional re-
shuffling as the 200-Day moving average nears, we will put our 
official target at 25.50.  Our stop for this play is slightly 
higher than normal, as we will put it just above todays high at 35.20.
Given our entry today at 31.90, we risk 10.34% to make 
18.8%.  Conservative investors, who wish to risk less in their 
trade, can put a tighter stop just above resistance on the sixty-
minute chart at $33.25.  We certainly hope that this bus 
manufacturer will drive into a brick wall.  

FYI: Traders may also want to note that WGO, in the same 
industry, also broke down below serious support at the $40 level 
and its 200-dma.  Looks like a short.

Please note the annotated chart for this play.



Picked on July 16th at $31.90 
Change since picked:    +0.00
Earnings Date        05/24/02 (confirmed)


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

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

Apache Corp - APA - close: 51.29 change: -1.04 stop: *text*

Our long play in APA remains inactive.  The stock traded lower 
with the oil index (OIX.X) on Tuesday and never approached our 
entry trigger at $52.86.  A small gain in oil futures (cl02q) did 
little to help the sector, which may have been adversely impacted 
by sector rotation and a 1.9% decline on the Dow.  Of course, the 
price of oil has seemed to have little bearing on oil stocks in 
recent weeks - at least to the upside.  Now that crude oil prices 
are back to $28.00 this is resistance and the commodity could see 
profit taking, which could accelerate any downside movement in 
the group.  Conversely, a breakout might actually get bulls to 
take notice!  APA moved lower with the group and finished the 
session with a loss of nearly 2%.  Today's second consecutive 
bounce from both psychological support at $50.00 and the 200-dma 
($50.75) is a bullish technical development.  If the overall oil 
group can stage a rebound, we'd expect APA to trade in relatively 
strong fashion.  But because we haven't actually seen any 
evidence of such a rebound, we're going to use a very 
conservative risk management strategy.  If APA is triggered, our 
stop will be set at $51.94.  Less cautious traders could use our 
original stop of $49.99.

Picked on July xxth at $xx.xx <- see text
Change since picked:    +0.00
Earnings Date        01/03/03 (unconfirmed)




---

Pulte Homes, Inc - PHM - close: 46.57 change: -2.19 stop: *text*

Last night we said we liked PHM as a long play, but only if it 
proved itself by trading above $49.00.  Providing a nice example 
of why we use entry triggers, PHM briefly spiked to $48.95 on 
Tuesday morning and then proceeded to freefall all the way down 
to the $46 level.  Shares traded in tandem with the DJSUHB home 
construction index and finished with 4.4% loss.  Weighing on the 
group were sharp declines in shares of KBH and BZH, the latter of 
which raised Q2 guidance after the bell.

Despite this weakness, both PHM and the DJUSHB closed above their 
200-MA's.  This leads us to believe that the stock may still 
stage a powerful rebound if/when the broader market heads higher.  
We'll probably drop PHM (un-triggered) if shares close under the 
200-dma at $46.20.  Remember that if we are triggered, our stop 
will be set at $46.99.

Picked on July xxth at $xx.xx <- see text
Change since picked:    +0.00
Earnings Date        07/23/02 (confirmed)




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

Anheuser-Busch - BUD - cls: 46.55 chg: -3.02 stop: 48.05 *new*

This beer is going flat.  After being triggered in BUD yesterday, 
we were slightly worried about being stopped out of our trade 
with an overall market bounce.  In our favor, weakness in the 
beverage market is beginning to appear (again).  As anticipated, 
BUD fell to its 200-Day MA today, indicating a test of support 
and institutional selling.  Because most tests of the 200-Day MA 
do not usually fall straight through without a bounce, we are 
anticipating a little choppiness in this area.  We are going to 
lower our stop to 48.05, challenging this trade at the 200-Day 
MA.  Part of our reasoning for this firm stop, is the expected 
rise in earnings from alcohol and tobacco companies in these 
tough economic times.  Reuters reported today - "Major U.S. 
tobacco companies, led by Philip Morris Cos. Inc. and brewers 
like Anheuser-Busch Cos. Inc. are expected to report an increase 
in second-quarter earnings later this month."  There was also 
news that June's domestic beer shipments were down 1.4% but 
analysts noted there was one less shipping day in June that could 
have accounted for the lower result.  With confirmation of 
weakness on the 200-Day MA, we expect to see BUD fall to our 
target in the $44.50 area.  Working on our behalf is the dip in 
Stochastics on the daily chart, which look as if the %D with 3 
period smoothing is also about to fall below the lower line.  We 
have lowered our stop, reducing risk, now let's hope BUD gets 
bitter beer face!    

Picked on July 15th at $48.75
Change since picked:    +2.20
Earnings Date        07/24/02 (confirmed)
 



---

Fluor Corp. - FLR - close: 32.30 change: -1.35 stop: 33.15 *new*

Now that FLR has flirted with our first target, we are going to 
really challenge this trade.  We will lower our stop to 33.15, 
which is just above first resistance on the 15-minute chart.  
Because FLR is trading on the bottom of the channel, it could 
potentially bounce, testing its previous 35-35.50 resistance.  By 
putting a tight stop on the trade here, we make sure we book our 
profits and allow ourselves a chance to re-short Flour if it does 
bounce to its previous resistance.  If the position continues to 
fail, we will plan to officially exit the trade if shares of FLR 
trade at or below $30.00.  Premier is currently up 10% in this 
play.
 
Picked on July 3rd at $35.94
Change since picked:   +3.64
Earnings Date       07/30/02 (confirmed)
 



---  

ITT Indust. - ITT - close: 61.80 change: -1.06 stop: 63.21 *new*

With the initial breakdown in the market, we were triggered in 
ITT yesterday.  Our entry came just after the market opened, 
dropping quickly to reach a low of 61.60 before rebounding 
slightly on the day.  This breakdown gave us hope that our trade 
will quickly reach the 200-Day moving average and puncture our 
target price at $60.11.  Trading on the bottom of the Keltner 
channel, ITT could be in for a bounce, thus we plan to lower our 
stop to $63.21.  This stop is one penny above today's high. There 
is no new news on ITT today.  
 
Picked on July 15th at $64.25
Change since picked:    +2.45
Earnings Date       07/30/02 (confirmed)
 



---

Sonic Automotive - SAH - cls: 21.30 chg: -1.56 stop: 23.01 *new* 

SAH is falling into our hands.  This short still looks good, with 
the daily chart continuing to look weak.  SAH made a lower low 
today, closing on the low at 21.25.  This is good news for bears 
in this trade, as it is a good sign for future selling.  As we 
stated previously, once Sonic Automotive fell below, 22.20, we 
would implement a tight stop at $23.00. However, just for the 
sake of technical protocol, we are putting the stop at 23.01, 
forcing the trade to print one penny above the whole number.  
With our trade now active, we are hoping to see our target of 
$20.66, where we will close the entire position.  There is no new 
news on Sonic Automotive.  
   
Picked on July 10th at $22.73 
Gain since picked:      +1.43
Earnings Date         7/30/02 (confirmed)
 



---

XL Capital - XL - close: 76.88 change: -1.22 stop: 80.01*new*

Given the fact that XL hit our first target today, we closed half 
of our position at 75.50.  We are very excited to take this 
hypothetical money off of the table.  For the remaining half of 
our position, we will lower our stop to 80.01, which is both 
psychological and technical resistance.  By moving our stop 
lower, we are challenging the remaining portion of our trade, 
ensuring that the entire trade will be booked for a profit.  Part 
of our logic for this strategy is that XL is trading on the 
bottom of its channel and could bounce with potential short 
covering.  There is no innovative news on XL.  Our target for the 
second part of our position still remains in the $70.00 region.     

Picked on July 3rd at $80.89
Gain since picked:     +4.01
Earnings Date       04/29/02 (confirmed)






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

=============
HR New Plays
=============

  -----------------
  New Bearish Plays
  -----------------

NPS Pharmaceuticals - NPSP - cls: 18.70 chg: +1.26 stop: 20.09

Company Description:
NPS discovers, develops and intends to commercialize small 
molecules and recombinant proteins as drugs, primarily for the 
treatment of metabolic, bone and mineral, and central nervous 
system disorders. The Company's two lead product candidates are 
AMG 073 for the treatment of hyperparathyroidism, which has been 
licensed to Amgen and is in Phase III clinical trials, and PREOS, 
the Company's proprietary compound for the treatment of 
osteoporosis, which is in a Phase III trial.

Why We Like It:
With the recent rally in biotech, we believe that the Index looks 
slightly over bought.  Before we begin to explain this play, we 
would like to briefly mention that this trade is a trade based on 
pure technical merit, and we would like to urge caution.  Over 
the last year, we have seen money rotated through different 
sectors, making them look very attractive, only to dump at the 
very last moment.  With the recent biotech rally, we believe that 
this is what is happening, but are using extreme caution in light 
of potential buyers coming off the fence.  Perhaps, a good 
strategy for this high risk/high reward play is simply to use a 
half position, thus eliminating some risk. (source: company press 
release)

NPSP has rallied from 12.72 to $18.70 in the last four days, a 
47% move!  Shares actually hit $20 (20.04) intraday today before 
selling off into the close (+57% in four days at the high today).  
Because of the sheer percentage gain on this stock, we feel that 
is in our favor to attempt a short, fading this stock back into 
the descending channel. We're going to open the play at current 
levels.  Our initial target is $16.01, where we hope to make a 
quick 14%.  As the trade begins to show its face, we will 
probably change our target if further weakness appears in the 
biotech sector.  Our stop on this trade is a nickel above today's 
high at $20.09.  If this trade starts to work in our direction, 
we will quickly lower this to protect ourselves from any major 
pain.  The 60-minute chart below shows several things.  First, it 
displays the four-day, 47% move, which failed almost exactly at 
resistance.  Secondly, our target at 16 is also previous 
resistance, which should now be new support.  Finally, the sixty-
minute Stochastics display a possible over-bought condition, 
which we are hoping to capitalize on.  Overall, this is a high-
risk play, and we will make sure that we pay special attention to 
our stop.  We will NOT hesitate in closing this trade for a loss 
if need be.  However, we are hoping that our channel analysis of 
the $BTK.X leads us to a quick profit!  If all things work out 
correctly, we could make 14.3% on this trade!
(Email version)
Please click here for an annotated chart on the NPSP play.

Chart of: NPS Pharmaceuticals, Inc., 60 minutes.


  
Picked on July 16th at $18.70 
Change since picked:    +0.00
Earnings Date        07/23/02 (unconfirmed)
 




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

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

NVIDIA Corp - NVDA - close: 21.35 change: -0.54 stop: 20.94 *new*
 
It's been a wild week for shareholders of NVDA.  The stock traded 
strong on Monday and exploded to the upside when the broader 
market staged its afternoon rally.  Our play was triggered when 
shares moved above $20.01.  The bullishness carried over into 
today's session after NVDA unveiled its new NForce 2 series of 
chips.  Shares set a new relative high and came within 14 cents 
of our profit target at $23.49 before being dragged back down by 
the weakening NASDAQ and SOX.X.  The semiconductor index was once 
again thwarted by resistance near 400.  Of course, it wasn't 
surprising to see some indecisiveness in the chip sector ahead of 
tonight's INTC earnings announcement.  Due to Intel's 
disappointing report (discussed in more detail in Jeff Bailey's 
market wrap tonight), we're going to take a defensive stance 
towards this play.  Our stop is now located at $20.94, just under 
today's low.  This would protect a gain of 4.3% from our entry 
point.  Shares were trading near $20.90 in the after-hours 
session, leading us to believe that we may be stopped out at 
tomorrow's opening price.

Picked on July 15th at $20.02
Gain since picked:      +1.33
Earnings Date        08/21/02 (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 

PII     Polaris Industries Inc     66.25     +2.48
CSGS    CSG Systems Intl Inc       17.50     +0.79
TTWO    Take-Two Interactive       19.32     +0.68
MGAM    Multimedia Games Inc       18.60     +1.00

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

NXTL    Nextel Communications       6.53     +1.53
CREE    CREE Inc                   14.75     +1.35
ELON    Echelon Corp               14.85     +1.05
WEBM    WebMethods Inc             10.68     +1.18
MYGN    Myriad Genetics Inc        19.78     +1.04
MDCO    The Medicines Company      12.24     +1.11
NWRE    Neoware System Inc         12.99     +1.08

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

TDS     Telephone & Data System    65.20     +5.25
USM     U.S. Cellular Corp         27.39     +2.09
ADRX    Andrx Corp                 23.60     +1.85
TKTX    Transkaryotic Therapies    41.20     +3.77
CTSH    Cognizant Tech. Solutions  54.79     +5.69
OSIP    OSI Pharmaceuticals        24.05     +1.60
NBIX    Neurocrine Biosciences     29.50     +1.18

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

WMT     Wal-Mart Stores            49.88     -3.56
RD      Royal Dutch                44.40     -1.90
WYE     Wyeth                      34.75     -3.15
UN      Unilever                   55.53     -2.57
LOW     Lowe's Companies           37.60     -3.40
FBF     FleetBoston Financial      24.52     -2.90
DB      Deutsche Bank              63.22     -1.93
BUD     Anheuser-Busch Companies   46.55     -3.02
ITW     Illinois Tool Works        61.00     -3.31

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

KROL    Kroll Inc                  21.97     -1.50




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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.




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