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Daily Newsletter, Wednesday, 07/17/2002

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PremierInvestor.net Newsletter              Wednesday 07-17-2002
                                                  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
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In section one:

Market Wrap:      Tidal Commerce
Watch List:       FINL, GENZ, SNE, KCP, and more...
Play of the Day:  Is A Selloff In Store?


*******************************************************************
MARKET WRAP  (view in courier font for table alignment)
*******************************************************************       
07-17-2002        High      Low             Volume Advance/Decl
DJIA     8542.48 + 69.37  8723.37  8452.76 2243 mln   1760/1364
NASDAQ   1397.25 + 21.99  1426.28  1370.21 1942 mln   1873/1467
S&P 100   453.68 +  4.87   463.50   447.46   totals   3633/2831
S&P 500   906.04 +  0.00   926.53   895.03
RUS 2000  406.69 +  2.42   415.26   402.06
DJ TRANS 5411.76 - 22.34  2491.33  2377.93
VIX        39.80 +  0.28    42.14    38.94
VIXN       63.23 -  2.01    66.04    63.16
Put/Call Ratio      0.82 
*******************************************************************


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

Wednesday turned out to be a fairly choppy day as we watched 
earnings come forward.  The Dow had a particularly volatile day, 
gapping up on the open, then running 250-points, only to sell off 
into the close. The Industrial Index gained +69.37 for the day.  
The S&P 500 mimicked the Dow with hectic trading, closing up just 
+5.10 for the day.  The Nasdaq Composite also followed suit, 
closing up +21.99, at 1397.25.  Much of today's volatile trading 
was due to earnings from several of the Dow components.  Positive 
earnings came from Untied Technologies, Boeing, and Citigroup, 
while Honeywell and J.P Morgan disappointed investors.  

Chairman Alan Greeenspan testified to congress for the second day 
in a row. Much of Mr. Greenspan's commentary closely followed his 
testimony yesterday, and failed to reveal new information that 
would help boost investor sentiment.  Mr. Greenspan has commented 
that he does expect more companies to disclose accounting 
problems, though he also added that he expected the events to 
become less of an issue.

Dow component earnings: 

International Business Machines (NYSE:IBM) sales increased 7% for 
the quarter, while revenue exceeded analyst expectations at 19.4 
billion.  Earnings per share were higher than consensus estimates 
of 83 cents per share, coming in at 84 cents per share.  The 
spectrum of analyst expectations ranged from 83 cents to 87 
cents.  All in all, this was a massive drop in earnings compared 
to a year ago, and included a multibillion-dollar write down.   
However, even though the numbers decreased from last year, the 
street sees the earnings as positive news, with the stock trading 
up in after hours.
 
Citigroup (NYSE:C) reported 73 cents per share, with a 15% rise 
in quarterly profits.  The increase was due to growth in consumer 
lending and strength in bonds.  

Boeing (NYSE:BA) also reported better than expected earnings.  
Profits fell 7 percent, with earnings per share at 92 cents, 
beating the expected 80 cents per share.  The minimized loss by 
Boeing was a great confidence booster to the stock, as many had 
expected much worse numbers in light of the September 11th 
events.  Boeing had lost much of its business from commercial 
airlines, given the contraction in leisure traveling.  

United Technologies (NYSE:UTX) reported strong earnings at $1.23 
per share versus $1.20 anticipated by analysts.  The increase 
came from accounting changes and increased earnings from its Otis 
elevator business.  UTX closed 4.9% higher today on its earnings 
news.

J.P Morgan Chase (NYSE:JPM) missed expectations, posting earnings 
of 58 cents per share, falling short of the expected 65 cents per 
share.  As one of the few companies giving cautious future 
guidance, JPM said they have "not seen the turn around yet".  JPM 
also said that they had indeed seen an increase in consumer 
lending, but had a very sluggish quarter of investment banking.  

Honeywell International (NYSE:HON) met expectations at 55 cents 
per share, but lowered its full-year profit forecast, as demand 
for its products had not recovered as anticipated after September 
11th.  Honeywell International manufactures airplane parts such 
as: electronics, brakes and tires.  In efforts to cut costs, the 
company also plans to lay off 2000 employees, while also looking 
for a new chief financial officer.  

Other earnings included Coka-Cola (NYSE:KO), which beat estimates 
by two shares reporting 54 cents per share.  Retailer Linens'n 
Things (NYSE:LIN) exceeded analyst's projections of 11 cents per 
share, reporting 13 cents per share.  Tellabs (NASDAQ:TLAB) 
missed earnings by one cent.  Advanced Micro Devices (NYSE:AMD) 
fell short of estimates of -0.45 cents per share, coming in at 
-0.54 cents per share.  Etrade (NYSE:ET), IDEC Pharmaceuticals 
(NASDAQ:IDPH), and Polycom (NASDAQ:PLCM) all met expectations.

For all of you who follow Dow companies closely, I have included 
a table of Dow stocks and the dividends they pay.  The Industrial 
stocks are sorted in descending order by dividend yield, from 
highest to lowest.  Dividend hunters, start your engines!

Table of: Dow Jones Industrial Average, Dividends.
Image link =

 




Tuesday's economic numbers:

Building permits increased to 1.700M from 1.6555M, while Housing 
Starts stumbled from 1.680M to 1.672M.  The decrease in Housing 
Starts was attributed to poor demand in the South.  However, the 
Midwest saw modest demand and the Northeast enjoyed an increase 
in buyers.  Despite the decrease in Housing Starts, the increase 
in Building Permits shows a strengthened future outlook for 
residential construction, as permit activity continues to rise.  
Lower interest rates (near 6.5%) are partially responsible for 
the increase.  Overall the housing numbers are bullish.  

I would like to take a moment and look at another indicator that 
was not reported in mainstream news.  Today API and EIA reported 
that crude oil inventories had decreased for the second week in a 
row.  Although there was a discrepancy in the amount of inventory 
reduction, both entities agreed that overall inventories had gone 
down.  If inventories continue to decrease, it will help to boost 
oil and gas prices, which could help oil stocks.  So that aside, 
lets talk about jet fuel... Yes, jet fuel.  Last week, the market 
reported that part of the rational behind the decline in oil 
stocks was due to the decrease in demand of jet fuel by 
commercial airlines.  However, the oil and gas inventory numbers 
today point out that jet fuel refinery production is up to 1.6 
million barrels per day.  This is the HIGHEST level of production 
since September 11th.  So then, we have a lack of demand, but 
increased production?  The speculation is that the U.S. 
Government has been buying and storing jet fuel for a possible 
(some say anticipated) attack on Iraq.  Well isn't that 
INTERESTING.
Oil stocks are cheap here, however, if we go to war with an oil 
producing country again, we will all wish we had bought oil 
earlier.  Keep in mind this is pure speculation.


Ok, so now that we have ALL OF THAT (which I had to write twice 
today, as I my computer got a virus and wiped out my whole 
article ...sorry I had to vent) out of the way, lets talk about 
technical analysis.    

Given the good and bad news, the Dow is trying to hold the bottom 
of its channel, potentially looking for a bounce.  Today was the 
first time in EIGHT days that the Dow finished positive.  The 
0.8% gain today is only a fraction of the nearly 10% it lost in 
the last two weeks.  At this critical level, the Dow needs to 
find support.  Hopefully we will see more positive earnings this 
week.  The chart below displays the current descending channel 
that Dow is trading in.  Unfortunately, the lack of decisiveness 
in the overall market is readily apparent in the current trading 
environment.  The daily Stochastics highlight this, as the 
indicator cannot make up its mind, erratically bouncing on the 
lower line.  One might interpret this as good news for technical 
bulls, as the indicator could be due for a bounce as well.  

Chart of: Dow Jones Industrial Average, Daily.

 



The Nasdaq is on the opposite side of the Dow, testing its 
resistance, while attempting to breakout.   If we ask ourselves 
why the Nasdaq is mysteriously strong and the Dow unlikely weak, the 
answer is within institutional money flow.  The Nasdaq "got 
smoked" in the tech and biotech sell-off over the last two years, 
while the Dow has been reasonably shielded because of large 
dividend paying companies.  

Chart of: Nasdaq Composite Index, Daily.

 



Over the last two weeks we have watched a rally in the 
Semiconductors Index $SOX.X (technology companies), and more 
recently, the Biotech Index $BTK.X.  We can attribute part of the 
rise in semis to investors who are rushing in to catch the boat, 
fearing that these companies have bottomed out.  The same might 
be said of the Biotech Index $BTX.X, which has dwindled over the 
year to levels not seen since December of 1999.  

The chart below demonstrates that the money, which originally 
fled the Biotech, has started moving back into many of these 
companies.  The index has bounced off the first level of 1999 
support, and has rallied over the last couple of days.  I would 
like to point out that there is another tier of support below the 
historical level shown.  The lower support, which we cannot see 
on this chart, is around 200.  Below I will explain the rally in 
semiconductors, which will also help explain why biotech 
companies have risen as well. 

Chart of: Biotech Index, Daily.


 




To understand what is happening in both the Biotech and 
semiconductor sectors, the easiest thing for us to do is simply 
look at the big picture.  The chart below displays the $SOX.X 
over the last three years.  It is fairly simple to see that the 
technology index has sold off very hard ever since it reached its 
high in 2000.  If we look back to 1999, we see horizontal support 
below the 400 area.  This support was recently tested in 2001, 
when the Index bounced off 400 in September and October.  The 
rally later failed when the Index reached its descending 
resistance.  Understanding the technical merit of the bounce, we 
can move one step further.  If we look at the top descending 
resistance line and horizontal support line (on the below chart), 
we can infer a triangle.  This triangle has been the target 
support and resistance over the last few years, evidenced in the 
consolidation of the $SOX.X.  We can assume that this triangle 
will try to hold until it meets at the tip.  Thus, the support 
and resistance indicate that the current move up (rebound), will 
try to bounce to the descending resistance line.  This is 
potentially what institutional money is thinking.  (**Note: 
Institutional money looks at much more than technical analysis, 
digging deep into company fundamentals as well.)  No matter how 
you rationalize the current move, it is important to note that a 
break below the current horizontal support could bring in sellers 
who no longer wish to sail in a sinking boat.    

Chart of: Semiconductor Index, Weekly.


 



So here we are, the gains of 2000 have been almost completely 
erased, and thus, investor money is attempting to come back into 
the sector.  Smart money is scared money.  Is it the right time?  
Or are there still sellers who are desperately hoping to dump 
their stock with any rally, after having been caught holding all 
this time?  Time will tell.

Do we find it odd that the mass sell off in the Dow has come 
almost exactly at a time when the $SOX.X and $BTK.X are testing 
LONG TERM support?  The simple technicalities here, point to a 
rotation of money out of the "safe" dividend companies of the big 
board and into the tech and bio bottom fishes.  Does this mean 
that the bottom has come for Biotech and semiconductors?  Only 
our crystal ball knows.  However, we can note that there are many 
"coincidences" in the market over the last two weeks.  Earnings 
and economic reports will continue to affect ALL sectors, 
including the strong ones.  Some of the earnings are good, some 
are bad; many are incredibly hard to figure out, filled with 
spin.  The point to be noted is that regardless of earnings, 
there IS a rotation of money in our markets.  If the bios and 
semis fail at resistance, the larger Dow companies could begin a 
recovery ascent as money flows from the techs back to the Dow.  
We are in a bear market, however, within the bear market, there 
are also small bull markets...  I would like to ask our readers 
to attempt to see the teeter-totter of money.  If you look close 
enough, you will see that when it is low tide on the other side 
of the world it is high tide here.  Find the moon (institutions) 
and watch the tidal flow of money circulate in and out of our 
global sectors of trading commerce.

Trust yourself, you are the most incredible investor in the 
world. 


Mark Whistler
Editor

mwhistler@PremierInvestor.net        


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

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

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

Finish Line, Inc. - FINL - close: 14.31 change: +0.46

WHAT TO WATCH: Retail stocks have really gotten spanked over the 
past week.  With sector leader WMT and the RLX.X retail index 
hitting new multi-month lows today, we're anticipating more 
selling in the group.  A short play in FINL might be a good way 
to take advantage of this weakness.  Shares are resting just 
above key support at $13.70.  A move under this level could take 
FINL to the $12-$13 region in short order.  P-n-f chartists may 
also want to note that FINL recently fell below bullish support 
at $15.00.




--- 

Genzyme Corp. - GENZ - close: 20.60 change: +1.94

WHAT TO WATCH: Genzyme announced earnings on Wednesday morning.  
Investors applauded the 41% increase in Q2 earnings and bid the 
stock up by more than 10%.  This in turn brought GENZ back into 
the large gap region from June 20th.  If the bullish momentum 
continues into the next few sessions (and the uptrending daily 
stochastics suggest they will), shares could quickly reach the 
$25 level.  Aggressive traders looking for an action point can 
watch for a move above today's high at $21.57.  Note that this 
would be considered a high-risk/high-reward play because of the 
volatile nature of biotech stocks and possibility of a post-
earnings selloff.





---

Guitar Center - GTRC - close: 15.99 change: -1.08

WHAT TO WATCH: The RLX.X weakness discussed above has also spread 
to specialty retailers.  This group had previously held up 
relatively well.  GTRC struck a chord with the bears today, as 
shares dropped 6.3% and closed at the 200-dma.  We think a break 
below today's low ($15.74) would probably lead to a test of solid 
support at $15.00 or even the January lows near $13.00.  It'll 
take some serious selling pressure to push the stock below 
$15.00, but today's strong volume is an indication that the bears 
are firmly in control.  The point-and-figure chart is looking 
bearish as well.  GTRC is currently displaying a double-bottom 
sell signal and has just broken through bullish p-n-f support.  




--- 

Kenneth Cole - KCP - close: 22.29 change: -1.13

WHAT TO WATCH: We were very tempted to add KCP as short play 
tonight.  The stock has weathered several days of losses and is 
currently in the process of filling in the large gap from April 
8th.  Although we ultimately decided not to short a stock that's 
so oversold, a break below $22.00 would provide an attractive 
action point for aggressive traders.  We'd be looking for a rapid 
move down to the 200-dma at $20.16.  Technically, the bearish 
MACD crossover on the weekly chart and recent rising volume 
portend more near-term weakness.




---

OSI Pharmaceuticals - OSIP - close: 25.00 change: +0.95

WHAT TO WATCH: We're expecting a pullback in this overextended 
drug stock, which gained 3.9% on Wednesday following a "buy" 
rating from Banc Of America.  OSIP rallied more than 25% over the 
past five sessions and is currently sitting on reliable 
resistance at $25.00.  This level is backed by the declining 50-
dma at $25.80.  We suspect that profit-taking could quickly take 
shares back to the $21-$22 area.  Aggressive short positions can 
be gauged on a rollover from current levels.  A move below 
today's low of $23.92 would provide more conservative traders 
with a possible entry point.




---

Sony Corp. - SNE - close: 47.82 change: -1.77

WHAT TO WATCH: The continued decline in the U.S. Dollar has had a 
negative impact on SNE.  As the Japanese Yen (JY02U) strengthens, 
Sony's exports become less attractive overseas.  Repeated 
attempts by the Bank Of Japan to prop up the Dollar have thus far 
been in vein.  Pressuring SNE on Wednesday was speculation that 
there may be "potential problems" with their accounting.  A 
spokesperson denied these allegations, but don't they always?  
Technically, SNE is hinting at a retest of its 2002 lows near 
$40.50.  While shares are still safely above that level, today's 
close under the 200-dma ($48.38) and historical support at $48.00 
must have the bears salivating.  The 3.5% decline came on the 
strongest volume since April and also produced a double-bottom 
sell signal on the p-n-f chart.  The recent bearish MACD 
crossover also bolsters our bearish outlook.  Short positions can 
be targeted on a move under today's low of $47.61.


 

--- 

St. Paul Co. - SPC - close: 29.24 change: -2.56

WHAT TO WATCH: Shares of this insurance company are in a 
freefall.  SPC was whacked for an 8% loss on Wednesday and closed 
at multi-year lows.  Obviously the stock is extremely oversold - 
It's lost nearly 30% over the past month - but aggressive 
momentum traders may want to consider taking short positions at 
current levels.  Volume backing the recent decline has been 
strong, and today's reading of 3.7M was the highest in over a 
month.  SPC closed near the lows of the day, suggesting more 
downside on Thursday.  Keep stops tight, however, as a sudden 
short-covering rally could occur at any time.





===============
Play-of-the-Day (new High-risk/High-reward BEARISH play)
===============

Jo-Ann Stores - JAS.A - close: 23.49 change: -1.96 stop: *text*

Company Description:
Jo-Ann Stores, Inc, the leading national fabric and craft 
retailer with locations in 49 states, operates 876 Jo-Ann Fabrics 
and Crafts traditional stores and 70 Jo-Ann etc superstores. 
(source: company press release)

Why We Like It:
Shares of JAS.A (that's not a typo) rose out of single-digit 
obscurity last November and staged an incredible rally that took 
the stock to an all-time high of $29.25 in June.  That represents 
a gain of more than 500% in less than eight months!  Of course as 
any dot-com investor can tell you, all good things must come to 
an end.  JAS.A has faltered recently amid a bearish climate in 
the retail group.  With 900-lb gorilla WMT and the RLX.X retail 
index both approaching their September lows, even the stronger 
subsets of the sector have begun to fall.  Specialty retail in 
particular seems to be playing "catch up" with the rest of the 
group...And JAS.A looks technically vulnerable to a whole lot of 
catching up.  The stock had moved higher in an ascending channel 
during its upward journey.  Tuesday's violation of that channel 
didn't sit well with shareholders, as evidenced by today's 7.7% 
drop.  We believe this is just the beginning of a substantial 
consolidation.  

Shares broke support at $25.00 and closed under the 50-dma 
($24.96) for the first time since November, and today's volume 
was the strongest in over two weeks.  The daily stochastics 
(5,3,3) have not yet reached oversold levels, indicating that 
JAS.A still has room to drop.  In order to gauge our downside 
potential, we fit a retracement from $5 (the inflection point 
from last November) to the all-time high of $29.25.  This gives 
us the 38% and 50% retracement levels at roughly $20 and $17, 
respectively.  Because $20.00 also correlates with psychological 
support and the 100-dma ($20.68), we think this is a reasonable 
target to shoot for initially.  But in light of the colossal 
gains posted over the past 8 months, an eventual decline to $17 
is not out of the question.  If the $20 level fails we'll simply 
ride JAS.A lower with a tight trailing stop.  Speaking of stops, 
if this play is triggered we'll place ours at $26.13, just above 
today's high.  More conservative traders could use a stop 
slightly above the 50-dma at $24.96.  Note that we will not 
actually enter this play until JAS.A trades below today's low of 
$23.18.

Picked on July xxth at $xx.xx <- see text
Change since picked:    +0.00
Earnings Date        08/20/02 (confirmed)
 






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


PremierInvestor.net Newsletter                Wednesday 07-17-2002
                                                   section 2 of 2
Copyright  2001, All rights reserved.
Redistribution in any form is strictly prohibited.

The entire newsletter is best viewed in COURIER 10 for alignment
=================================================================
To view this email newsletter in HTML format with imbedded
charts and graphs, click here:
http://www.PremierInvestor.net/htmlemail/g17b_2.asp
=================================================================

In section two:

Active Trader Non-Tech Stocks
  Triggered Plays:       FRK (bearish) 
  Stop Adjustments:      THO, XL (bearish)
  Closed Bullish Plays:  APA, PHM
  Closed Bearish Plays:  ITT

High Risk/Reward
  New Bearish Plays:     JAS.A
  Closed Bullish Plays:  NVDA



=================================================================
Active Trader/Non-tech Stocks (AT) section
=================================================================

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

Triggered Short Plays
---------------------

Florida Rock Inc. - FRK - close: 33.17 change: +0.15 stop: 34.11

FRK continued its recent decline on Wednesday and slid to new 
multi-month lows.  Our short play was triggered when FRK reached 
$32.99.  Although the stock bounced in afternoon trading and 
finished in positive territory, shares were unable to approach 
the intraday high of $33.87.  We're looking for this level to now 
act as resistance.  New entries can be targeted on a move below 
today's low of $31.95 or a rollover near $34.00. 





Stop Adjustments
----------------

Thor Industries - THO - close: 29.99 change: -1.91 stop: 32.71 *new*

The breakdown we had anticipated in THO occurred today, as shares 
dropped nearly 6% and set new relative lows.  Although we're 
pleased with these immediate results, we're also going to aim to 
minimize our upside risk by moving our stop to $32.71, just above 
today's highs.  More aggressive traders could use a stop just 
above the 50-dma.  A rollover from the $30 or $32 levels may 
provide an opportunity to open new bearish positions.  Remember 
that we'll exit this play if shares trade at or below $25.50. 




--- 

XL Capital - XL - close: 74.50 change: -2.38 stop: 78.16 *new*
 
Shares of XL set another multi-month low on Wednesday and 
finished with a 3% loss.  The stock bounced from historical 
support at $72; at this rate we would not be surprised to see XL 
eventually reach the $70 level.  With this in mind, we're going 
to institute an official profit-target at $70.51.  A trade at or 
below this level will close our play.  We're also tightening our 
stop to $78.16, two cents above today's high.  





===============
AT Closed Plays
===============

  --------------------
  Closed Bullish Plays
  --------------------

Apache Corp - APA - close: 51.49 change: +0.20 stop: 51.94

After seven consecutive negative sessions, the Oil Index $OIX.X 
finally posted a gain on Wednesday.  This play was activated when 
APA gapped above our trigger point of $52.86, opening at $53.10.  
Shares were pushed higher by early-morning bullishness in the oil 
sector and overall broader market.  The stock then proceeded to 
rapidly decline to an intraday low of $50.70.  Our conservative 
stop-loss of $51.94 was violated in the process, thus closing our 
play for a 2.1% loss.  Traders who elected to use a wider stop 
should now be watching for APA to extend today's bounce from the 
200-dma ($50.81) and move up to the $55 level.  A breakout in 
crude oil futures (cl02q) could provide the catalyst for such a 
rally.  Weekly oil and gas inventories were reported today, 
showing a decline in inventory levels for the second week in a 
row.  The news is good for bulls, as it depicts a surge in 
demand.  Though this information may not immediately flow through 
to the price of oil stocks, we felt to be worth mentioning.  
 
Picked on July 17h at $53.10
Change since picked:   -1.16
Earnings Date       01/03/03 (unconfirmed)




---

Pulte Homes, Inc - PHM - close: 46.37 change: -0.20 stop: 46.99

PHM declined for the eighth straight session on Wednesday, but 
not before hitting our entry price ($49.01) in the first hour of 
trading.  Broader market weakness during Chairman Greenspan's 
Humphrey Hawkins testimony pulled both PHM and the DJUSHB home 
construction index to new relative lows.  The sector may also 
have been pressured this morning's Housing Starts number, which 
showed a 3.6% decline.  Our play was closed for a 4.1% loss when 
the stock reached our stop at $46.99.

PHM could very well bounce from current levels.  It's looking 
technically oversold (as gauged by the oversold daily 
stochastics) and managed to close just above the 200-dma.  
However, we would not be looking to buy this dip unless the 
homebuilding sector actually shows some signs of a rebound.  A 
break below the $45 level would be decidedly bearish.  In news 
for bulls still long PHM, the Building Permits report issued 
today, showed increased permits from 1.700M, from 1.672M.  The 
gain was said to bullish, and is traced to low interest rates of 
6.5%. 

Picked on July 17th at $49.01
Change since picked:    -2.02
Earnings Date        07/23/02 (confirmed)




  --------------------
  Closed Bearish Plays
  --------------------

ITT Industries - ITT - close: 61.90 change: +0.10 stop: 63.21 

Based on our belief that ITT may have been due for a bounce, we 
tightened our stop to $63.21 on Tuesday night.  Shares gapped 
higher with the broader market this morning and opened at $63.50.  
At this point our play was closed for gain of 75 cents, or 1.1%.  
Traders who used a more lenient stop should be encouraged by the 
way shares reversed course and finished with a paltry 10-cent 
gain.  A break below Monday's low of $60.60 could open the door 
for a test of the 200-dma at $58.15, but be aware of possible 
psychological support at $60.00.

Picked on July 15th at $64.25
Change since picked:    +0.75
Earnings Date        07/30/02 (confirmed)





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

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

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

Jo-Ann Stores - JAS.A - close: 23.49 change: -1.96 stop: *text*

Company Description:
Jo-Ann Stores, Inc, the leading national fabric and craft 
retailer with locations in 49 states, operates 876 Jo-Ann Fabrics 
and Crafts traditional stores and 70 Jo-Ann etc superstores. 
(source: company press release)

Why We Like It:
Shares of JAS.A (that's not a typo) rose out of single-digit 
obscurity last November and staged an incredible rally that took 
the stock to an all-time high of $29.25 in June.  That represents 
a gain of more than 500% in less than eight months!  Of course as 
any dot-com investor can tell you, all good things must come to 
an end.  JAS.A has faltered recently amid a bearish climate in 
the retail group.  With 900-lb gorilla WMT and the RLX.X retail 
index both approaching their September lows, even the stronger 
subsets of the sector have begun to fall.  Specialty retail in 
particular seems to be playing "catch up" with the rest of the 
group...And JAS.A looks technically vulnerable to a whole lot of 
catching up.  The stock had moved higher in an ascending channel 
during its upward journey.  Tuesday's violation of that channel 
didn't sit well with shareholders, as evidenced by today's 7.7% 
drop.  We believe this is just the beginning of a substantial 
consolidation.  

Shares broke support at $25.00 and closed under the 50-dma 
($24.96) for the first time since November, and today's volume 
was the strongest in over two weeks.  The daily stochastics 
(5,3,3) have not yet reached oversold levels, indicating that 
JAS.A still has room to drop.  In order to gauge our downside 
potential, we fit a retracement from $5 (the inflection point 
from last November) to the all-time high of $29.25.  This gives 
us the 38% and 50% retracement levels at roughly $20 and $17, 
respectively.  Because $20.00 also correlates with psychological 
support and the 100-dma ($20.68), we think this is a reasonable 
target to shoot for initially.  But in light of the colossal 
gains posted over the past 8 months, an eventual decline to $17 
is not out of the question.  If the $20 level fails we'll simply 
ride JAS.A lower with a tight trailing stop.  Speaking of stops, 
if this play is triggered we'll place ours at $26.13, just above 
today's high.  More conservative traders could use a stop 
slightly above the 50-dma at $24.96.  Note that we will not 
actually enter this play until JAS.A trades below today's low of 
$23.18.

Picked on July xxth at $xx.xx <- see text
Change since picked:    +0.00
Earnings Date        08/20/02 (confirmed)
 




===============
HR Closed Plays
===============

  --------------------
  Closed Bullish Plays
  --------------------

NVIDIA Corp - NVDA - close: 19.50 change: -1.80 stop: 20.94
 
In Tuesday's update for NVDA we tightened our stop to $20.94, 
thinking that a post-INTC hangover would cause the stock to trade 
lower.  Inexplicably, last night's seemingly negative news from 
the INTC camp was ignored by the semiconductor group, which 
traded higher this morning.  Despite the sector strength, our 
play was closed for a 4.0% gain, when NVDA opened at $20.84.  The 
catalyst for the morning weakness was a downgrade from Morgan 
Stanley.  The firm based their downgrade on weak demand for PC's, 
an inventory correction for Xbox chips, and pricing pressure on 
graphics chips as a whole.  Intraday news that NVDA had been 
selected to provide the graphics engine for AAPL's new iMac did 
little to halt the decline.

So what's next for NVDA?  Today's hefty 8.4% selloff does not 
bode well for the bulls.  Volume clocked in at nearly 16M shares, 
the highest reading in over two weeks.  The daily stochastics 
(5,3,3) have begun to fall from overbought levels, hinting at 
more selling on the horizon.  It's also worth noting that the 
stock reversed sharply after approaching the top of its 
descending regression channel.  At this point it appears shares 
may pull back to the $17.50-$18.00 level.  Of course, given 
NVDA's volatile nature we would not be surprised to see a sharp 
bounce from this region.

Picked on July 15th at $20.02
Gain since picked:      +0.82
Earnings Date        08/21/02 (unconfirmed)
 






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