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Daily Newsletter, Thursday, 07/25/2002

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PremierInvestor.net Newsletter                  Thursday 07-25-2002
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In section one:

Market Wrap:      This Market is Like a Box of Chocolates.....
Play-of-the-Day:  My Pants are too SHORT
Market Sentiment: Hanging On, So Far


************************************************************
MARKET WRAP  (view in courier font for table alignment)
************************************************************
      07-25-2002           High     Low     Volume Advance/Decline
DJIA     8186.31 -  5.00  8309.39  7945.95 2.82 bln   1819/1368
NASDAQ   1240.08 - 50.20  1289.72  1220.93 2.32 bln   1550/1910
S&P 100   417.30 -  2.68   425.62   405.99   Totals   3369/3278
S&P 500   838.68 -  4.75   853.83   816.11 
RUS 2000  378.11 -  0.45   385.22   371.27 
DJ TRANS 2236.58 + 52.70  2250.16  2730.32   
VIX        44.65 -  0.64    47.88    43.11   
VXN        69.48 +  3.89    69.92    65.53 
Total Vol   5,501.0M
Total UpVol 1,499.4M
Total DnVol 3,735.9M
52wk Highs   31
52wk Lows   557
TRIN        1.63
PUT/CALL     .76
*************************************************************

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

This market is like a box of chocolates.....

The fictitious character Forest Gump said, "Life is just like a 
box of chocolates.  You just never know what you're going to 
get."  Today's volatility for the major market averages and 
"surprises" found in various stocks has many traders and 
investors thinking this market is like a box full of chocolates.

Yesterday's wild swings were found again today.  While not as 
spectacular there was volatility nonetheless and will most likely 
test anyone's nerves and emotions.  If you think I'm talking only 
about a bull's resolve, you'll soon find out I'm not.

The often perceived "stodgy" Dow Industrials (INDU) 8,161 -0.06% 
finished lower by 4.98 points and looks like a rather boring day 
was found.  However, the 363-point trading range from 8,309 to 
7,945 speaks of volatility and how emotional traders are right 
now.

The volatility in the Dow wasn't limited to just 30 stocks 
either.  The broader S&P 500 Index (SPX.X) 838 -0.56% (-4.75 
points) traded with a high/low range of 853 to 816.  That's a 
rather large range, especially for such a broad-based index.  
From yesterday's close of 843, the whipsaw action represents a 
4.5% jump to today's high or a -3.2% decline from the 843 level.

The NASDAQ Composite (COMPX) 1,240 -3.88% (-50 points) never did 
show a gain and many 4-lettered stocks found here finished near 
their session lows.

You can't talk about "a box full of chocolates" without 
mentioning Hershey Foods (NYSE:HSY) $78.30 +25.28% meteoric rise 
and new 52-week high.  Bullishness was fueled on word that a 
group of controlling shareholders was "exploring" the sale of the 
company, in an auction that could fetch about $11 billion!  With 
136.5 million shares outstanding, it didn't take investors long 
to come up with a "perceived" value of $80 per share and have 
every investor wondering if other stocks might not be 
"undervalued."  I dare say, there was not any technical sign in 
HSY's charts that could have prepared a bear for such a reversal 
of fortune.  

After recent months of "easy pickings" for bears, a good note to 
take here is NEVER place all your money on one individual stock 
bet (bullish or bearish).  As it relates to a box of chocolates, 
the bear that took too big of a bite in Hershey (HSY) found a 
lemon-flavored filling.

If I were a bull and long the stock, I'd be a seller, especially 
at $78.30 if the upside is $80 (based on the $11 billion 
comments).  As for a potential bearish play, I'd take a wait and 
see approach over the next couple of days.  There's no telling 
what kind of a "sweet tooth" lurks for such a well-known brand 
name.

While there was little "hint" to the bullishness found in Hershey 
(HS), there's been plenty of bearish "hints" in AOL Time Warner 
(NYSE:AOL) $9.64 -15.43% for months as the stock has given sell 
signal after sell signal on its point and figure chart.

Yesterday's earnings announcement left little reason for investor 
"to hang in there" for the next quarter and the company's 
disclosure that the Securities and Exchange Commission (SEC) is 
conducting a fact finding inquiry into its accounting practices 
had investors looking for the exits, in what appeared to be a 
very narrow doorway.  Volume surged to 150.3 million shares.

AOL Time Warner Chart - Daily Interval





Some thought that a large seller getting out of the stock at the 
$20 level and the then 52-week low in AOL might mark a bottom in 
the stock as the last set of weak hands was letting go.  Even a 
long-time bear in AOL was wrong days later.  With the stock 
recently achieving its bearish vertical count from its point and 
figure chart of $10.50, it may be tempting to buy a very small 
position at current levels with "risk capital" (what you can 
afford to lose if the stock goes to zero) and then NOT buy 
another single share until the stock can break above some type of 
technical resistance.  Even if an investor had bought some AOL 
back in November when the stock broke ABOVE its 50-day MA at 
$33.75, but then stopped out with a stop loss order placed just 
under the 50-day $34.00 in late November, little harm would have 
been done.  However, with the SEC looking into the company's 
accounting practices, "risk capital" is all I'd be thinking of in 
a bullish trade.  

If you're bullish on AOL longer-term, 1 call option (representing 
100 shares) could be purchased in the January 2004 $10.00 calls 
(LOLAB) for $2.30 or $230.00 (plus commission).  What this would 
do is give you the RIGHT (not the OBLIGATION) to buy 100 shares 
of AOL for $10.00 between now and January expiration of 2004.  If 
the stock were to go up to $15.00, then the call option you 
bought for $2.30 ($230.00) would be worth at least $5.00, or 
($5.00 * 100 shares).  In essence, instead of buying 100 shares 
at current prices and RISKING $964.00, you could lessen your risk 
with 1 call option to $230 (plus commission) and still have 
exposure to 100 shares of stock between now and January 2004 
expiration.  You're break-even point between now and then would 
be the strike price=$10 plus the premium paid $2.30 (price of the 
option) or $12.30.

As for a new bearish position?  Risk has to be assessed to the 
$15 level near-term and that's a rather horrible looking 
risk/reward from current levels, even if you're targeting $0.00.  
A bear could look short on a break below today's low, but follow 
with a stop above today's high of $10.15.  While there were some 
sellers in the stock today, there were obviously some new longs 
coming in and looking for a bargain.  A break of today's lows 
might get today's bulls to throw in the towel for another leg 
lower as NOBODY knows for sure where the bottom might be found.

Thinking simple and straight forward

One "commonality" I'm finding with some of the "rumors" and even 
confirmed SEC investigations is the types of complex 
businesses/companies these investigations are surrounding.

I was talking with a friend last night that is involved in the 
bond underwriting business and we were talking about this "SEC 
cloud" that is hanging over the markets and many stocks.

In brief, we both agreed that equity bulls should be limiting 
their bullish play selections to companies where the accounting 
or business models are fairly straightforward.

Sometimes the environment that surrounds us does perhaps dictate 
what a trader/investor should be trying to do in their account.

It is tough enough to select stocks from the bullish side in the 
current market environment without the "cloud of uncertainty" of 
a potential SEC investigation presenting itself.  I've gotten to 
the point of even AVOIDING some technically strong stocks that 
have been "mentioned" as being under SEC scrutiny (even though 
the rumors have been denied).

My thinking under the current market environment is "I just want 
to try and AVOID any POTENTIAL problems as institutional 
investors are probably trying to do the same."

While Tyco (NYSE:TYC) $8.25 -17.50% is not technically strong, 
here's a stock that just continues to be periodically hammered 
lower on rumors of SEC investigations.  Its business model is 
very complex and rumors ranging from SEC investigations to 
today's rumors that the company has engaged bankruptcy or 
reorganization attorneys weighs on the stock.  Once again, TYC 
officials denied today's rumors of bankruptcy or reorganization 
saying it has $7 billion in cash.

While I cannot deny nor confirm any belief of wrongdoing or 
"fuzzy math," perhaps the complexity of its business model and 
the way it accounts for things opens a door to uncertainty.  As 
such, I'd try and avoid this type of uncertainty from the bullish 
side of things.

Eventually, a lot of this SEC stuff will come to pass.  If you 
don't believe this, then remember back to the late 1980's and the 
Savings and Loan crisis.  

There's a fascinating chronology of the S&L crisis.  As you read 
it, I think you'll see some regulations and procedures that were 
implemented by the Bank Board.  For instance, there was this 
accounting procedure called RAP accounting standards that was 
phased out in May 1987 and the S&Ls then had to conform to GAAP 
accounting standards.  There may well be some parallels to the 
"RAP accounting" that sounds a little like "off balance sheet 
accounting," which has been discovered (starting with Enron) in 
recent months.

If the accounting parallels aren't enough for some comparison to 
today's market environment and SEC looking into things, then some 
may remember the "Keating Five."  While I was a "whipper-snapper" 
in the late 80's (working for Mobil Oil at the time) the "Keating 
Five" rings a bell.  The "Keating Five" consisted of U.S. 
Senators (John McCain, John Glenn, Donald Riegle, Alan Cranston 
and Dennis DeConci), all who received campaign contributions from 
Charles Keating's Lincoln Savings and Loan, which went under.

If you're interested, this is a neat web-page which shows a 
chronology of the S&L crisis.  I looked at it and feel like I'm 
back in the late 80's again!  
http://www.fdic.gov/bank/historical/s&l/index.html

The main reason I think its somewhat important to understand the 
S&L crisis and what took place during that time in market history 
is that there were indeed some publicly traded entities that were 
"crooked to the core" and didn't survive.  However, there were 
those that did and bearish speculators with little regard as it 
relates to controlling risk in bearish traders were dealt a harsh 
blow.

It remains IMPERATIVE in this market environment to cut back your 
trade size and ease into positions.  This can allow the trader to 
"take a little more heat" and hold a trade with some wider stops 
during extreme volatility like we're seeing.

Just because a trader may cut back their trade size to 1/4 or 1/2 
positions, they should still be DISCIPLINED with their stops.  In 
our play list, we will profile some rather tight stops in an 
effort to provide technically sound stopping points, but more 
importantly to protect subscriber's accounts.

Jeff Bailey


=========================
Play-of-the-Day           (New Active Trader BEARISH play)
=========================

VF Corporation - VFC - close: 36.76 change: -0.20 stop: 37.51

Company Description:
VF Corporation is the world's largest apparel company and a 
leader in jeanswear, intimate apparel, playwear, workwear and 
daypacks. Its principal brands include Lee®, Wrangler®, Riders®, 
Rustler®, Vanity Fair®, Vassarette®, Bestform®, Lily of France®, 
Lee Sport®, Healthtex®, JanSport®, Eastpak®, Red Kap® and The 
North Face®. (source: company press release)


Why We Like It:
Although VFC reported better than expected earnings, on July 
17th, it still does not change the fact that investors have been 
dumping retail stocks for weeks due to concerns in a double-dip 
recession or just a slow down in the economic expansion.  The 
apparel maker reported 77 cents per share versus an expected 63 
cent by analysts.  However, even though sales were better than 
expected, total sales fell to 1.19 billion from 1.32 billion in 
the previous year.  Slowing in the retail apparel market has been 
evident in the Retail Index $RLX.X, which has fallen 21.87% since 
early May.  VF Corporation has dropped 18.30% since the same 
time.  

On pure technicals, we are trading this stock short at current 
levels based off of the descending resistance in the current 
channel.  Staging a short covering rally with the rest of the 
market, VFC showed strength yesterday.  Unfortunately, the rally 
failed right at descending channel resistance, and horizontal 
resistance coming from congestion in November and December of 
last year.  Our target on this trade is $31.50, which is the 
bottom of the channel, and horizontal support from 2000 and 
September of 2001.  Conservative traders may want to consider 
covering and taking profits as VFC trades near the $34 support 
level where the stock has bounce three times in the last couple 
of weeks.  We are putting a VERY tight stop on this trade at 
$37.51, which is just barely above today's high.  We have two 
reasons for this.  First, $37.51 is just above the channel, and 
we do not want to be caught short in the midst of a channel 
reversal, breakout, rebound, short covering, lose all our money, 
trend change...  Is that descriptive enough or what?  Second, the 
Consumer Sentiment numbers are set to be released tomorrow.  If 
the numbers are REALLY good, and indicate that every American 
from coast to coast is buying again.... Well, then we don't want 
to be short.  So, our stop is very tight at $37.51, only allowing 
a 2% loss if this trade does not IMMEDIETLY work on our behalf.  

For an annotated chart, click here:
Chart of: VFC, Daily.



Picked on July 25th at $36.76 
Gain since picked:      +0.00
Earnings Date        07/17/02 (confirmed)
 




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

Hanging On, So Far
By Steven Price

Follow the bouncing ball, if you can.  A negative outlook from 
Taiwan Semiconductor (TSM), the world’s largest chip foundry, 
pushed the chip stocks downhill.  The company said it was 
slashing its capital spending budget by more than $500 million 
for the rest of the year.  There is talk that the sector may be 
cutting additional jobs to help control costs. The sector, as 
measured by the Semiconductor Index ($SOX.X) had rallied with the 
rest of the broader market yesterday.  A look today’s chart now 
shows the image of a cliff diver.  The SOX gave up 10% today to 
finish down to $318.05, a new 52 week low.  This close dropped 
the index out of a descending channel it had been in since March.

This was in contrast to the image presented this morning by the 
broader markets, which looked to continue yesterday’s near record 
rally.  The Dow was up 118 points at its high point today, 
lending credence to Wednesday’s 488-point rally.  The day started 
with a slew of economic data, which looked promising.  Initial 
weekly unemployment claims were down 21,000 to 362,000, well 
below the estimate of 385,000.  This was the lowest level in 17 
months, with the bulk of these employees apparently hired by the 
SEC investigations department, which continued their busy ways 
with a probe into AOL/Time Warner’s accounting, announced after 
Wednesday’s closing bell.   Durable goods orders fell 3.8%, which 
was widespread across most industries.  Aircraft orders were hit 
the hardest, with a 47% drop.  Analysts were expecting a 0.5% 
rise in orders, so this number was disappointing.  New home sales 
were up 0.5%, while existing home sales were down 11.7%

The Dow then dropped 364 points to bottom at 7945.95, before 
rallying all the way back to 8186.31, for only a 4.98-point loss 
on the day.  Part of this intraday drop may be attributed to 
rumors that the SEC was investigating J.P. Morgan and Citigroup, 
for their involvement in Enron.  These rumors may or may not be 
true, however just the hint of investigation can send stocks 
tumbling. After the rumors passed, both stocks rebounded from 
their lows for the day to finish close to unchanged. Citigroup’s 
CEO Sanford Weill addressed this issue on the company’s website, 
assuring investors that its activities were legal and stating 
that he was ready to certify his company’s financial statements.  
The SEC will require CEOs to certify their company’s financial 
statements beginning August 14.  

Tyco spent the day denying rumors of bankruptcy, stating they had 
enough cash to meet obligations through November of 2003 without 
refinancing, and had begun to buy back debt in the open market.  

Bill Gates, speaking at a Microsoft meeting, was said to have 
given one of his least enthusiastic speeches, with nothing to 
rally the troops.  The troops apparently read into this and 
hammered the stock, which finished down $3.41 to $42.82.  
Microsoft, in combination with the semiconductors, led the Nasdaq 
Composite lower by 50 points, giving back most of Wednesday’s 61 
point game.  Microsoft did announce plans to add 5,000 new jobs 
and increase spending on research and development.

How’s the economy doing?  Although it doesn’t feel like it, 
Treasury secretary Paul O’Neill seems convinced that its 
fundamentals remain strong.  He stated, “In our history we have 
seen times when there is a disconnect between the stock market 
and the fundamental productive power of our economy... this is such 
a time...” This may actually be true, as the market seems to be 
searching for a bottom.  The accounting dominos seem to keep 
falling, however, and until the CEO certification process is 
over, it is hard to tell just how many more surprises are out 
there.  

Bullish percentages continue to fall across the board, even after 
yesterday’s rally.  Today’s rebound from the market bottom is 
promising, but with the semiconductors setting new relative lows, 
it is hard to see which sector can lead the market back up.  
Tomorrow’s consumer sentiment numbers will be very interesting 
after the Dow rally.  They should give us a barometer as to how 
the public has reacted to a plethora of news this week.  This 
will be followed by consumer confidence next Tuesday.

The ratio of advancing versus declining issues was slightly 
positive for the NYSE, but slightly negative for the Nasdaq. The 
bad news, however, was that there were only 16 52-week highs on 
the NYSE, versus 326 52-week lows.  The Nasdaq had similar 
numbers with 46 highs, versus 325 lows.  

After hours earnings from Starbucks and Qualcomm beat estimates, 
while JDS Uniphase missed.  

Where are we headed?  A very good question after a wild week.  We 
may see some profit taking tomorrow afternoon if the Dow can 
build on its gains of Wednesday.  We may also see buying by those 
who don’t want to be left behind if we really have found a 
bottom.  The market has taken such a substantial hit this month 
that it will take a sustained rally to believe in a bottom.  A 
500-point rally, which holds the next day, is very positive, but 
it still amounts to less than a third of this months losses.   
Sideways movement is a possibility for a while, until we get 
beyond the certification process.  Respect your stops, the 
movement is getting much harder to predict. 






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

Market Averages

DJIA ($INDU)

52-week High: 10679
52-week Low :  7702
Current     :  8186

Moving Averages:
(Simple)

 10-dma: 8263
 50-dma: 9329
200-dma: 9792

S&P 500 ($SPX)

52-week High: 1226
52-week Low :  797
Current     :  839

Moving Averages:
(Simple)

 10-dma:  868
 50-dma:  992
200-dma: 1089

Nasdaq-100 ($NDX)

52-week High: 1782
52-week Low :  896
Current     :  894

Moving Averages:
(Simple)

 10-dma:  970
 50-dma: 1099
200-dma: 1379


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


Semiconductor Index ($SOX.X)

The Semiconductor Index saw its lowest closing level since 
December 1998.  Taiwan Semiconductor (TSM), the world's largest 
semiconductor foundry, announced this morning that they were 
cutting their budget for the rest of 2002, possibly by more than 
$500 million.  The S&P 500 and Dow  managed to hold most of 
Wednesday's large gains, in spite of the semis. This group, along 
with Microsoft, led the Nasdaq lower, giving back most of 
Wednesday's 61-point rally.  This sector's problems are bound to 
have an effect on the broader markets if the IT spending 
environment does not pick up. 

52-week High: 657
52-week Low : 318
Current     : 318

Moving Averages:
(Simple)

 10-dma: 364
 50-dma: 423
200-dma: 508


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

Market Volatility

In the past, the VIX topping out over 50 has foreshadowed a run-
up in the broader markets, as the index falls back.  The index 
reached a recent high of 56.74 Wednesday morning, before 
beginning its descent down below 45, where it ended today.  This 
was a result of Wednesday's huge rally, followed by the S&P 100 
holding most of its gains today. The next week will be very 
interesting to watch. If the market reaches a higher level, or 
travels sideways, we could see the VIX back into the 30s.

CBOE Market Volatility Index (VIX) = 44.65 –0.64
Nasdaq-100 Volatility Index  (VXN) = 69.48 +3.89

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

          Put/Call Ratio  Call Volume   Put Volume
Total          0.76        767,306       582,779
Equity Only    0.63        619,800       393,349
OEX            0.71         33,985        24,144
QQQ            0.27         79,786        21,363

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

Bullish Percent Data

           Current   Change   Status
NYSE          25      - 2     Bull Correction
NASDAQ-100    28      + 0     Bull Correction
DOW            3      - 4     Bear Confirmed
S&P 500       13      - 1     Bear Confirmed
S&P 100       10      - 1     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  1.27
10-Day Arms Index  1.32
21-Day Arms Index  1.35
55-Day Arms Index  1.35

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       1760          1366
NASDAQ     1519          1850

        New Highs      New Lows
NYSE        17            167
NASDAQ      63            330

        Volume (in millions)
NYSE     2,825
NASDAQ   2,141

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

Commitments Of Traders Report: 07/16/02

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 increased their short positions by 25% as the markets 
fell in the last period, while the small traders added almost 
17,000 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%)
07/16/02      388,943   464,162   (75,219)   (8.8%)

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%
07/16/02      157,370    67,247    90,123     40.1%

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 reduced their short positions by over 20% as the NDX 
held its own against the other market indices.  Small traders 
reduced their overall long position by adding 2,000 short 
contracts.


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%)
07/16/02       33,152     39,866    (6,714) ( 9.2%)

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%
07/16/02       12,816    10,774     2,042      8.7%

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

Commercials remained virtually unchanged, while the small traders 
shifted from a small long position to a decidedly short position. 



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%
07/16/02       20,357    14,074    6,283     18.2%

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%
07/16/02        8,524    10,133    (1,609)   (8.62%)

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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PremierInvestor.net Newsletter                 Thursday 07-25-2002
                                                    section 2 of 2
Copyright © 2001, All rights reserved.
Redistribution in any form is strictly prohibited.

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In section two:

Net Bulls
  New Bearish Play       ROOM
  Bearish Play Updates:  KLAC,QLGC
  Closed Bearish Plays   MOT

Stock Bottom / Active Trader
  New Bullish Plays      MGAM
  New Bearish Plays:     VFC
  Closed Bullish Plays:  DIA

High Risk/Reward
  Bullish Play Updates:  ISSX
  Bearish Play Updates:  BYD
  Closed Bullish Plays:  DCTM
  Closed Bearish Plays:  CEPH

Split Trader
                         BYS: 3-for-1 split announcement

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


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

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

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

Hotels.com - ROOM - close: 39.50 change: -0.18 stop: 42.01

Company Description:
Hotels.com, a majority-owned subsidiary of USA Interactive, is 
the largest specialized provider of discount lodging worldwide, 
providing service through its own websites (including 
www.hotels.com and others), more than 25,000 affiliated websites, 
and its toll-free call centers. (source: company press release)

Why We Like It:
Travel-related issues were one of the most surprising areas of 
strength in the post-9/11 environment.  Like a phoenix rising 
from the ashes, airline and travel stocks rebounded sharply as 
the sudden shock of the attacks subsided and people resumed their 
normal habits.  Such was the case with ROOM, which more than 
tripled from its September lows to March highs.  But in recent 
months it seems that ROOM (along with competitors EXPE and TSG) 
has been pressured by a renewed downdraft in the XAL.X airline 
index and weakness in the broader market.  The stock has been 
trading in a descending regression channel since mid-May and 
recently hit a new multi-month low of $32.83.  Shares traded 
sharply higher yesterday after the company announced better-than-
expected earnings and boosted its revenue outlook.  Of course, it 
didn't hurt that all the major market indices were also blazing 
higher.

ROOM continued higher today and moved to the top of its 
descending regression channel.  The subsequent sell-off from that 
level has created what we think is a favorable risk/reward 
scenario for a short trade.  Although bulls can argue that the 
daily stochastics (5,3,3) are hinting at further upside, today's 
close under psychological support at $40.00 suggests otherwise.  
By shorting ROOM at current levels, we hope to ride the stock 
back to the bottom of its channel near $33.00.  We'll set an 
official profit-target as shares approach this region, but may 
aim for the $30.00 level if the broader market enters a freefall.  
We also won't hesitate to close the play if shares bounce from 
previous resistance (now potential support) at $35.00. Our stop 
is set at $42.01, slightly above today's high.  Traders looking 
for some bearish confirmation may want to wait for ROOM to trade 
under $39.00 before taking any short positions.  Also note that 
we're leaning heavily on the technicals but the argument could be 
made that investors are concerned that a slow economy will reduce 
American's desire to travel, which will affect revenues for the 
likes of ROOM.  Besides the descending channel has created a 
favorable climate for a sell-off in the near future.

For an annotated chart, click here:
Chart of: ROOM, Daily



Picked on July 25th at $39.50
Change since picked:    +0.00
Earnings Date        08/24/02 (unconfirmed)
 



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

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

KLA-Tencor - KLAC - close: 38.40 change: -3.93 stop: 40.50 

This morning KLAC opened up at 40.25, and sold heavily into the 
day.  The selling triggered our play at $39.74, opening our short 
position.  The semiconductor sector was noticeably weaker on news 
from Taiwan Semiconductor, which plans to cut it's capital 
spending for the rest of the year.  As a consequence, the $SOX.X 
broke through support with authority and looks like it could move 
much lower.  Although this is incredibly bad news for the sector, 
it is great news for our short play.  

With selling pressure, KLAC broke its most recent support, and 
could be headed for September lows.  We are very encouraged by 
the weakness of the stock, and are also happy to see the 
Stochastics cross below the lower line.  To protect ourselves 
from larger losses, we are going to lower our stop to $40.50, 
which is slightly above today's high.  Our initial profit target 
of $31.50 still stands for those traders willing to hold over 
earnings.  However, because of the unknown risks associated with 
an earnings report, we will end this trade on Monday's close.  
However, a move to the $35 level sounds like a good target for 
short-term traders.  Time is of the essence.   

Picked on July 25th at $39.74 
Gain since picked:      +1.34
Earnings Date        07/30/02 (confirmed)
 



---

QLogic - QLGC - close: 38.25 change: -3.01 stop: 41.50

Whew!  With a high of $41.44 yesterday, we thought we might get 
stopped out of this trade, if QLGC stock continued to rally.  In 
our favor, the broader market has faded once again, leading our 
stock further south.  Taiwan Semiconductor said today that it 
would not see anymore capital spending for the duration of the 
year.  This news has cause the semiconductor index to drag its 
feet, pulling QLGC down with it.  Although we would like to see 
more weakness in the sector, we certainly are not complaining
with today's losses.

Still fearing a potential short coving rally, we are lowering our 
stop to just above yesterdays high at $41.50.  This does 
challenge our trade, and also increases our chances of being 
stopped out, though at the same time we protect ourselves from 
excessive losses.  Worst-case scenario, we lose 8.3%.  We will 
still keep our strategy of booking half of our profits at $33.50, 
if the price is met.  The remaining portion of our strategy will 
then be closed at $30.10, a dime above the psychological support 
of $30.00.  Of course, if the stock begins to move into our 
profit target range, we will be trailing our stop behind, to make 
sure we don't give up our gains.  

Picked on July 23rd at $38.06
Change since picked:    -0.19
Earnings Date        07/18/02 (confirmed)
 




===============
NB Closed Plays
===============

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

Motorola - MOT - close: 12.18 change: -1.29 stop: 15.51 

The trend is your friend.  We shorted MOT on the descending 
resistance line, and were greatly rewarded for trading with the 
broader trend.  Even with a 488-point rally yesterday, our short 
still played right into our hands.  After being triggered on 
Monday, July 22nd, we have to admit we were slightly worried 
about this position.  However, with the daily Stochastics failing 
the lower line, and weak results from Taiwan Semiconductor 
(NYSE:TSM), MOT was pulled down with sector related weakness.  
Taiwan Semiconductor said that it expected to cut 2002 capital 
expenditure by 23 percent, causing a market-wide tech sell-off.  
TSM has the second largest capital budget, next to tech giant 
Intel (Nadaq:INTC).

We closed our position today on the bottom of the channel at 
$12.00, yielding an 18.14% gain.  For shorts still in this trade, 
the news from TSM is very encouraging, and could help with new 
lows in technology stocks.  Although this is not a license to 
short the entire sector, it is good news for shorts.  We would 
recommend that traders still in their positions put a tight stop 
loss on their trades in order to protect hard earned gains, 
especially now that MOT has tagged the bottom of its descending 
channel, even this stock could see an oversold bounce!  

Picked on July 22nd at $14.66
Change since picked:    +2.48
Earnings Date        07/17/02 (confirmed)
 





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

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

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

Multimedia Games - MGAM - close: 20.50 change: +1.45 stop: 18.94

Company Description:
Multimedia Games Inc. is the leading supplier of interactive 
electronic games and player stations to the rapidly growing 
Native American gaming market. The Company's games are delivered 
through a telecommunications network that links its player 
stations with one another both within and among gaming 
facilities. Multimedia Games designs and develops networks, 
software and content that provide its customers with 
comprehensive gaming systems. (source: company press release)

Why We Like It:
These days it's not easy to find stocks that have just broken 
above key levels of resistance, but that's exactly what MGAM did 
today when it tacked on 7.6%.  The stock may have been boosted by 
a delayed reaction to the company's Thursday morning earnings 
announcement, which featured an impressive 194% increase in year-
over-year Q3 EPS.  MGAM scored a major technical victory when it 
was finally able to close above the stubborn $20.00 resistance 
level, which had kept a lid on the stock for most of July.

We believe this bullish development will create a short-covering 
rally that could eventually propel MGAM to its 50-dma at $24.51.  
Although shares have traded sharply higher from Thursday's low of 
$17.07, the daily stochastics (5,3,3) indicate that MGAM has not 
yet reached overbought levels.  Point-and-figure chartists will 
also want to note that a trade at $21.00 will create a double-top 
buy signal.  Cautious traders may want to wait for a move above 
this level to enter long positions.  We're using the slightly 
more aggressive strategy of going long at current levels.  Our 
initial stop is set at $18.94, a penny under today's low.  If all 
goes as planned, MGAM will reach our official profit-target of 
$24.49 within the next several days.  Note that we may 
periodically move this target lower to reflect the declining 
action of the 50-dma.  Just for kicks, fit a retracement from 
$4.50 (where MGAM consolidated before breaking out in March of 
2001 ) to its all-time closing high of $35.35.  Yup...There's the 
50% level, just under $20.00!

Annotated chart link click here:
Chart of: MGAM, Daily.



Picked on July 25th at $20.50
Results since picked:   +0.00
Earnings Date        07/25/02 (confirmed)


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

VF Corporation - VFC - close: 36.76 change: -0.20 stop: 37.51

Company Description:
VF Corporation is the world's largest apparel company and a 
leader in jeanswear, intimate apparel, playwear, workwear and 
daypacks. Its principal brands include Lee®, Wrangler®, Riders®, 
Rustler®, Vanity Fair®, Vassarette®, Bestform®, Lily of France®, 
Lee Sport®, Healthtex®, JanSport®, Eastpak®, Red Kap® and The 
North Face®. (source: company press release)


Why We Like It:
Although VFC reported better than expected earnings, on July 
17th, it still does not change the fact that investors have been 
dumping retail stocks for weeks due to concerns in a double-dip 
recession or just a slow down in the economic expansion.  The 
apparel maker reported 77 cents per share versus an expected 63 
cent by analysts.  However, even though sales were better than 
expected, total sales fell to 1.19 billion from 1.32 billion in 
the previous year.  Slowing in the retail apparel market has been 
evident in the Retail Index $RLX.X, which has fallen 21.87% since 
early May.  VF Corporation has dropped 18.30% since the same 
time.  

On pure technicals, we are trading this stock short at current 
levels based off of the descending resistance in the current 
channel.  Staging a short covering rally with the rest of the 
market, VFC showed strength yesterday.  Unfortunately, the rally 
failed right at descending channel resistance, and horizontal 
resistance coming from congestion in November and December of 
last year.  Our target on this trade is $31.50, which is the 
bottom of the channel, and horizontal support from 2000 and 
September of 2001.  Conservative traders may want to consider 
covering and taking profits as VFC trades near the $34 support 
level where the stock has bounce three times in the last couple 
of weeks.  We are putting a VERY tight stop on this trade at 
$37.51, which is just barely above today's high.  We have two 
reasons for this.  First, $37.51 is just above the channel, and 
we do not want to be caught short in the midst of a channel 
reversal, breakout, rebound, short covering, lose all our money, 
trend change...  Is that descriptive enough or what?  Second, the 
Consumer Sentiment numbers are set to be released tomorrow.  If 
the numbers are REALLY good, and indicate that every American 
from coast to coast is buying again.... Well, then we don't want 
to be short.  So, our stop is very tight at $37.51, only allowing 
a 2% loss if this trade does not IMMEDIETLY work on our behalf.  

For an annotated chart, click here:
Chart of: VFC, Daily.



Picked on July 25th at $36.76 
Gain since picked:      +0.00
Earnings Date        07/17/02 (confirmed)
 




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

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

Diamonds Trust - DIA - close: 81.78 change: -0.32 stop: 79.94 

AHHHHHHH! So close our profit target, we could almost smell it!  
Yesterday we added a profit target of $83.50 but shares of the 
DIA only made it as high as $83.20 putting it 30 cents too short!
Unfortunately, in today's trading our Diamonds play was stopped 
out at $79.94, when the DIA had an intraday low of $79.25.  We 
know we should never complain about making money, but sometimes 
you just salivate for that homerun.  So, we will have to settle 
for a base hit, gaining 3.75 points, or 4.9% on this trade.  The 
Dow had a bit of a choppy day, trading up as much as 118 points, 
and then falling to a low of 239 points, only to close at a 
meager -4.98 points down.  In this volatile trading, our short 
position was stopped out, forcing us to close the trade.  With 
today's economic news being a mixed bag, the up and down trading 
came at no surprise.  For longs still in their positions, the 
most important thing we can emphasize is the statement: stop 
loss.  Because of the August 14th deadline coming up, and broader 
market accounting fears, anything can happen.  Thus, a trader 
still in the Diamonds should be extremely cautious.  If the 
market produces weak Consumer Sentiment numbers tomorrow morning, 
another sell-off could be in store.  Should this scenario 
materialize, it might be a good idea to tighten stops even more!  
Good luck and trade with caution!!       

Picked on July 25th at $75.50 
Gain since picked:      +4.44
Earnings Date              NA
 





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

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

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

Internet Sec. - ISSX - cls: 14.90 chg: -0.37 stop: 14.49

All things considered, ISSX held up relatively well today.  Some
 enthusiastic profit-taking could've been expected after 
yesterday's 15.6% rally - especially on a day when the GSO.X 
software index got hammered.  But the stock only pulled back 
2.4%, outperforming both the NASDAQ and GSO.  We were also 
pleased to see the 50-dma at $14.60 provide support.  Our stop at 
$14.49 will remain untouched as long as the bulls defend the 
moving average.  The p-n-f chart, which recently signaled a 
double-top breakout, offers additional technical encouragement.  
New entries can be considered on dips to the 50-dma, but only if 
the GSO.X is showing signs of a rebound.  ISSX looks technically 
strong but will likely have a difficult time moving higher in the 
face of sector sell-off.

Picked on July 24th at $15.01
Gain since picked:      -0.11
Earnings Date        07/18/02 (confirmed)




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

Boyd Gaming - BYD - close: 13.50 change: -0.18 stop: 14.01

Strong earnings from MGG and the broader market's huge short-
covering rally conspired to push BYD up to its 50-dma on 
Wednesday.  Fortunately this moving average provided resistance, 
and our stop at $14.01 remained intact.  Today's action was 
somewhat encouraging, with shares meandering under the 50-dma 
before finishing with a 1.3% loss.  Aggressive short-term traders 
can use the Inside Day strategy to take new short entries on a 
move below today's low of $12.85.  Other traders seeking trigger 
confirmation, could target bearish positions on a break below 
recent support at $12.00, of course you're sacrificing a pretty 
big move.  A move under $13.00 might be a better strategy.  Such 
a breakdown could clear the way for a dip to our profit target at 
$10.50.  At this point, if the markets produce a strong rally 
tomorrow we wouldn't be surprised to see BYD get stopped out.  
Use your best judgement on new plays.

Picked on July 18th at $14.11
Change since picked:    +0.61
Earnings Date        07/17/02 (confirmed)





===============
HR Closed Plays
===============
  --------------------
  Closed Bullish Plays
  --------------------

Documentum - DCTM - close: 14.35 change: -1.15 stop: 14.99

DCTM responded quite nicely to yesterday's NASDAQ rally, trading 
sharply higher and hitting a new relative high of $15.53.  As 
pleased as we were with this action, we chose to challenge the 
stock with a tight stop-loss of $14.99.  This level was violated 
early this morning when shares slipped under psychological 
support at $15.00.  Our play was closed for a gain of 99 cents, 
or 7.0%.  Of course, Wednesday's outbreak of bullish euphoria 
seems a bit out of place now that the NASDAQ has retraced a good 
chunk of its gains.  If the GSO.X software index breaks to all-
time lows (today's 7.3% pullback in MSFT is not encouraging for 
sector bulls), we could see easily DCTM fall to the 50-dma at 
$12.58.  A bounce from this level might provide another 
opportunity to go long, though good news of some sort would 
probably have to surface somewhere in the software sector to turn 
the group around.

Picked on July 22nd at $14.00
Gain since picked:      +0.99
Earnings Date        07/18/02 (confirmed)
 



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

Cephalon Inc. - CEPH - close: 42.25 change: +1.26 stop: 43.89

The biotech group traded relatively strong today after one of the 
sector's leaders AMGN announced stronger-than-expected Q2 
results.  This news helped to propel the BTK.X biotech index to a 
1.7% gain.  CEPH extended its bounce from Wednesday and eclipsed 
our stop at $43.89, thus closing our play for a loss of 11.5%.  
In light of the stock's outperformance of the BTK.X and the 
bullish daily stochastics, we would not be surprised to see 
shares retest near-term resistance at $46.20 within the next few 
sessions.  A rollover from this level (which is slightly under 
the falling 50-dma), might provide another chance to go short.  
On a related note, the BTK is making another attempt to move out 
of its descending channel.  A successful breakout could trigger 
another sector-wide short-covering rally, so traders still in 
short positions are urged to use caution.

Picked on July 23rd at $39.35 
Gain since picked:      -4.54
Earnings Date        08/06/02 (confirmed)
 





==================================================================
Split Trader (ST) section
==================================================================

Split Announcements
------------------- 

Bay State Bancorp, Inc.  3-for-1 Stock Split

Prior to the market close today, Bay State Bancorp, Inc. (AMEX: 
BYS) announced that its Board of Directors had authorized a 3-for-
1 stock split in the form of a 200% stock dividend.

The split will be distributed on Tuesday September 3rd, 2002 to 
shareholders of record on August 19, 2002.

BYS shows no splits in our data range, which begins in 1998.
We did note that shares are up significantly from their lows near 
$16.00 back in early 2000.  

Shares closed at $46.80 on Thursday.  For a current quote, click here:

http://user.financialcontent.com/pin1/quote.cgi?account=pin1&ticker=BYS

About the company
Bay State Bancorp, Inc. through its subsidiary Bay State Federal 
Savings Bank currently operates 6 banking offices and an 
administrative office in Norfolk and Suffolk counties. (source: 
company press release)


==================
  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.

Ticker  Company Name               Close     Change 

Value Plays With Bullish Signals
SFG     Stancorp Financial         50.61     +2.11
RKY     Adolph Coors Co.           57.08     +4.21
PRX     Pharmaceutical Resources   25.04     +0.79
DLX     Deluxe Corp                36.34     +1.59
SMD     Singing Machine            10.76     +1.01
ANFI    American National Fin.     12.45     +0.67
--------------------------------------- 
Breakout to Upside (Stocks $5 to $20) 
--------------------------------------- 
Ticker  Company Name               Close     Change 

ICOS    Icos Corporation           18.09     +1.65
PXR     Paxar Corporation          15.06     +1.76
RML     Russel Corporation         16.80     +1.56
FNLY    Finlay Enterprises Inc.    16.41     +1.39

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

AMGN    Amgen Inc.                 41.94    +4.85
SANG    Sangstat Medical Corp.     23.13    +2.37
NPSP    Nps Pharmaceuticals Inc.   22.19    +2.94
BBH     Biotech Holders Trust      75.50    +3.80
AHG     Apria Healthcare Group     22.80    +1.12
PLB     American Italian Pasta     45.28    +2.80

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

TKTX    Transkaryotic Therapies    34.70    -1.72
MCD     McDonalds Corporation      21.85    -1.92
CYMI    Cymer Inc.                 28.07    -3.88
NVLS    Novellus Systems Inc.      24.30    -2.97

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




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