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Daily Newsletter, Tuesday, 08/20/2002

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PremierInvestor.net Newsletter                 Tuesday 08-20-2002
                                                   section 1 of 2
Copyright © 2002, All rights reserved.
Redistribution in any form is strictly prohibited.

The entire newsletter is best viewed in COURIER 10 for alignment
=================================================================

In section one:

Market Wrap:      Oooooo Doggie!
Market Sentiment: Majority Rules
Play-of-the-Day:  Maximum Bearishness

-----------------------------------------------------------------
U.S. Market Numbers
-----------------------------------------------------------------
MARKET WRAP  (view in courier font for table alignment)
-----------------------------------------------------------------              
08-20-2002                High     Low     Volume Advance/Decline
DJIA     8872.07 -118.70  8986.50  8822.02 1.54 bln   1235/1932
NASDAQ   1376.57 - 18.00  1389.84  1370.98 1.45 bln   1370/2024
S&P 100   474.03 -  6.81   480.84   471.24   Totals   2605/3956
S&P 500   937.43 - 13.27   950.70   931.86 
RUS 2000  397.84 -  3.45   401.29   396.95 
DJ TRANS 2347.72 - 16.30  2367.10  2332.78   
VIX        32.56 +  0.99    34.01    32.05   
VXN        47.71 +  0.69    48.96    46.61
Total Vol   3,174M
Total UpVol 1,120M
Total DnVol 2,000M
52wk Highs    96
52wk Lows    220
TRIN        1.24
PUT/CALL     .74
-----------------------------------------------------------------


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

Oooooo doggie!

I think it was Dukes of Hazzard character Rosco P. Coltrane that 
was often as quoted as saying "Ooooo doggie," just after 
something happened, or just before something was about to happen.

Today was a "day of rest" for the most part and a lot of "inside 
days" were established on the bar charts.    These "inside days" 
are a hint that the bulk of market participants (bullish and 
bearish) have reached some type of short-term indecision point 
and a rather neutral type stance.

Despite lower number across the board in the major averages, 
bulls were able to defend the 50-day simple moving averages at 
the close in the Dow Industrials (INDU) 8,872 -1.32% (50-day MA @ 
8,835), S&P 500 (SPX.X) 937 -1.39% (50-day MA 930), NASDAQ 
Composite (COMPX) 1,376 (50-day MA 1,373) and NYSE Composite 
(NYA.X) 503 -1.22% (50-day MA 500).  Even the more volatile and 
tech-heavy NASDAQ-100 (NDX.X) 1008 -1.74% held above its 50-day 
MA that was broken to the upside at 996 on Monday.

All of the above mentioned major market averages traded "inside" 
of Monday's range and hints that the MARKET has come to some sort 
of short-term agreement on price, but tension may be building.

On one hand, we witnessed a rather strong round of buying in 
Treasuries today as YIELD fell rather sharply.  As "explained" in 
today's 01:00 intraday update, this isn't necessarily peculiar, 
but a bearish equity trader would certainly have wished for a 
sharper decline in stock prices on such a move.  The 5-year YIELD 
($FVX.X) finished near its low YIELD of the session at 3.244% and 
has me thinking that stocks found the bulk of their buying from 
bears willing to buy some pullbacks after yesterday's break above 
the 50-day moving averages in the major indexes, but not 
necessarily bulls clamoring for further equity exposure until 
some type of signal is given from the Treasury bond market.

For me, I'd want to see some type of break higher in the 5-year 
YIELD at 3.455%, which would signal further allocation AWAY from 
the safety of Treasuries and cash flowing toward stocks.

How "important" the 50-day moving average is on a technical basis 
may have been partially answered by the Semiconductor Index 
(SOX.X) 345.68 -4.78% today.  Traders will remember our comments 
regarding the 50-day MA late last week as it relates to the 
broader-market averages, and today's notable weakness in the 
Semiconductor Index (SOX.X) RELATIVE to the broader market 
averages hints this is a "group" that may still be one of sectors 
that bears are willing to short and perhaps lacking the more 
aggressive or risk averse bull.

Semiconductor Index Chart - Daily Interval

Chart=


There are some signs of technical weakness in the SOX.X compared 
to what we've seen in the major market averages as it relates to 
the 50-day MA.  It is WORTH NOTING that the group may have traded 
"cautious" ahead of tonight's book-to-bill numbers, which had the 
July Semiconductor Equipment Book-to-Bill ratio falling to 1.16 
from a revised 1.26 in June.  Deutsche Securities had estimated a 
1.19 reading, while Goldman Sachs was looking for 1.15.  So 
tonight's report was near consensus.  However, booking in July 
fell to $1.15 billion from a June revision of $1.17 billion 
(these are rolling 3-month averages).

For the most part, after hours trading found many of the larger 
semiconductor names edging higher after the book-to-bill report.  
Intel (INTC) $18.98 -2.46% edged up at $19.17, Applied Materials 
(AMAT) $15.02 -2.9% traded $15.10, Novellus (NVLS) $29.27 -4.93% 
gained to $29.40, while a bearish play we're profiling for 
tomorrow in the group had shares of Maxim Integrated Products 
(MXIM) $35.99 -5.03% trading 9,800 shares at $36.00 and another 
32,600 share block at $36.00 just after the 06:00 PM EST release 
of book-to-bill numbers.

Now, one thing I want to talk about as it relates to this group 
is the need for BEARS to slowly ease into things if looking 
short.  Things I like about easing into some shorts in the group 
is the current and past action and the above DOWNWARD regression 
channel and how this group didn't seem to be able to make much of 
a push above its 50-day MA like the major market averages did.

I've "highlighted" points "A" and "B" on the above chart of the 
SOX.X.  Point "B" is perhaps the technical situation a bear is 
trading right now as it relates to the regression channel.  Note 
the SIMILARITY between the SOX.X price action and what was found 
in the MACD oscillator at that same time.

Now, for what I DON'T like about this group and why a bearish 
trader needs to take it easy with partial positions currently or 
at least follow with some rather tight stops.  

Point A on the chart is April 17th.  At that time, the 
semiconductor bullish % (BPSEMI) from Dorsey/Wright and 
Associates was "bear confirmed" at approximately at 50% reading.  
At point B on the above bar chart, that was around May 15th and 
the semiconductor bullish % (BPSEMI) was deteriorating further 
and "bear confirmed" at about 36%.  You see how the sector 
internals were deteriorating as more and more stocks were giving 
point and figure sell signals.

Now, after today's action, Dorsey/Wright and Associates shows the 
semiconductor bullish % at 38% and "bull confirmed" after a 
recent low reading of just 8% in early August.  In essence a 
trader is currently trying to short a near-term top, and using 
the 50-day MA in the SOX.X as leverage.

It's the current internals and signs of strength from the broader 
group that has a bear cautious and only looking to ease into 
things.  Should the SOX.X trade targets of $300 or even the $260 
levels I don't think a bear needs to be "full position" to make 
some gains in their accounts.  A close stop just above Monday's 
high at $367 protects against further upside to retracement of 
$405.

I often speak of DIVERGENCE when looking at the technicals.  A 
trader would have to agree that if the SOX.X trades down to $300 
or even $260, then that would be SIMILAR to what we've seen from 
regression in the past.  However, DIVERGENCE would be found if 
the SOX.X breaks back above Monday's high and extends the recent 
rally from the August 5th low of 282.75.

Put yourself on both sides of the trade

There's an old trader's saying that goes... "There's only one 
side to the market.  It's not the bullish side or the bearish 
side, but the right side."

While that is rather prolific and rather obvious, I still like to 
look at a stock from "both sides" of things to see what each 
(bull and bear) is perhaps planning to do, and what each (bull 
and bear) is looking to do in the futures.

Maxim Integrated Products Chart - Daily Interval

Chart=


We can see some SIMILARITY between the bar chart of Maxim 
Integrated Products (NASDAQ:MXIM) $35.99 -5.03% and that of the 
Semiconductor Index (SOX.X).  Both showed some weakness today at 
downward trends and still trending lower 50-day MA.  I've left an 
"old" retracement bracket in place on MXIM, simply because I 
didn't change it despite the stock breaking the $32.20 level to 
the downside back on August 2nd.  But remember, the semiconductor 
bullish % was very weak near 8%, but also quite oversold at that 
time.  It was a time when we were alerting bears that risk was 
running high for any further bearish trades, and we can only 
imagine right now, that some bears are looking to cover on a 
pullback into the $30-$32.20 range on any decline to that point 
in the next couple of days.  Still, the weakness this group 
exhibits RELATIVE to the major market averages has a bear's 
interest for some downside action.

Jeff Bailey


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

Majority Rules

by Steven Price

The Dow experienced a triple-digit drop today, losing 118.72 to 
close at 8872.07.  This drop was accompanied by similar drops of 
13.27 points in the S&P 500, which finished the day at 937.43, 
and 17.95 points in the Nasdaq Composite, which finished at 
1376.59.  The Nasdaq 100 fell 17.93 to close at 1008.02.  While 
it may seem that I'm just reporting numbers, the reason for 
commenting on all four of these in the sentiment section of the 
newsletter, is that they all held above significant levels.

All four indices crossed their 50 day moving averages yesterday, 
not entirely a coincidence, as the market tends to rise and fall 
as a whole.  A strong rising tide will lift all boats, however 
the fact that they all broke a barrier that hadn't been reached 
since the spring, and all did it on the same day, is significant.  
While all of the indices gave back some ground today, they have 
all found support at the 50-dma.  If this level continues to 
hold, we may see a new base from which to begin the next leg up.  

The Dow had the Great Wall of 9000 staring it in the face, and 
retreated.  However, after a gain of over 1400 points since the 
morning low of 7532.66 on July 24, we were bound to see the index 
pause for a breath before getting over this next significant 
hump.  Today's pullback to just above the 50-dmas could be viewed 
by bulls as evidence of strength on the way up.  The bears will 
focus on the inability to get over 9000.  

A look at the bullish percentage figures now shows 56% of the 
Nasdaq 100 stocks giving point and figure buy signals, along with 
52.8% of the S&P 500 stocks and 50% of the Dow stocks.  While the 
Dow bullish percentage gave up 2% from yesterday's reading, this 
amounts to 1 stock out of 30 reversing its buy signal, while the 
0.8% gain in the S&P 500 translates to 4 stocks switching from 
sell signals to buy signals. The Nasdaq 100 remained unchanged.  
The point is that in spite of today's pullback, a majority of 
stocks are still giving buy signals in these indices.  This 
majority was established at Monday's close, and has held up.

It is hard to view the failure at 9000 as a turning point in the 
market, as long as a majority of stocks have broken above recent 
highs.  The Dow could give up 700 points from Monday's high and 
still have only retraced 50% of its recent gains. This is not to 
say we haven't simply experienced a bear market rally, which is a 
bump in the road on the way down.  However, with many positive 
signals, and the 50-dmas currently holding, I'm not yet slipping 
back into hibernation with the rest of the bears.


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

Market Averages

DJIA ($INDU)

52-week High: 10679
52-week Low :  7702
Current     :  8872

Moving Averages:
(Simple)

 10-dma: 8728
 50-dma: 8835
200-dma: 9730

S&P 500 ($SPX)

52-week High: 1226
52-week Low :  797
Current     :  937

Moving Averages:
(Simple)

 10-dma:  914
 50-dma:  930
200-dma: 1072

Nasdaq-100 ($NDX)

52-week High: 1782
52-week Low :  892
Current     : 1008

Moving Averages:
(Simple)

 10-dma:  963
 50-dma:  996
200-dma: 1340


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

The Semiconductor Index (SOX.X): The Semiconductor Index has 
enjoyed a meteoric rise the last two weeks.  It rebounded from 
its August 5 close of 283.91 to close yesterday at 363.06, just 
under its 50-dma.  This rise is significant for the bulls, while 
the fact that it could not hold above the 50-dma is significant 
for the bears.  While the NDX, Dow and S&P 500 all managed to get 
above their 50-dmas - and hold there in spite of today's 
pullback, the SOX was turned away and landed just above 
yesterday's low of the day.  What may be significant in terms of 
support though, is that today's low of 343.24, was approximately 
the same as yesterday's low of 343.96.  This will be the next 
level to watch for this group.  While it was not able to hold the 
50-dma, it may have found support just a bit lower.

52-week High: 657
52-week Low : 282
Current     : 345

Moving Averages:
(Simple)

 10-dma: 326
 50-dma: 361
200-dma: 497


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

Market Volatility

The VIX has dropped precipitously in the last two weeks, from a 
high of just under 50 on August 5, to the low 30s.  While this 
may seem like an enormous show of faith in the health of the 
overall market, remember that this past spring it was trading 
around 19.  Summer is generally a period of very low volatility, 
and this year has been the extreme exception, not the rule.  If 
the market can hold these levels, or slowly creep forward, we 
would normally see a VIX closer to 20 at the end of August.  This 
year, however, with September 11 around the corner, we may not 
see a reading below 30 before then.

CBOE Market Volatility Index (VIX) = 32.56 +0.99
Nasdaq-100 Volatility Index  (VXN) = 47.71 +0.69

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

          Put/Call Ratio  Call Volume   Put Volume

Total          0.74        509,438       376,768
Equity Only    0.62        420,722       260,655
OEX            0.78         19,942        15,609
QQQ            0.19         30,598         5,805

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

Bullish Percent Data

           Current   Change   Status
NYSE          41      + 3     Bull Confirmed
NASDAQ-100    56      + 10    Bull Confirmed
DOW           50      + 0     Bull Confirmed
S&P 500       53      + 5     Bull Alert
S&P 100       53      + 2     Bull Alert

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

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

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

 5-Day Arms Index  0.80
10-Day Arms Index  1.01
21-Day Arms Index  1.13
55-Day Arms Index  1.31

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       1043          1698
NASDAQ     1299          1955

        New Highs      New Lows
NYSE         35              58
NASDAQ       28             115

        Volume (in millions)
NYSE     1,539
NASDAQ   1,494

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

Commitments Of Traders Report: 08/13/02

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 have reduced positions on both sides of the coin, 
resulting in a net change of 700 short contracts.  Small Traders 
have reduced long positions by 3700 more contracts than shorts.


Commercials   Long      Short      Net     % Of OI 
07/23/02      405,969   471,704   (65,735)   (7.5%)
07/30/02      430,833   482,957   (52,124)   (5.7%)
08/06/02      431,590   478,879   (47,289)   (5.2%)
08/13/02      427,618   475,536   (47,918)   (5.3%)

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
07/23/02      166,713    73,778    92,935     38.6%
07/30/02      153,858    67,451    86,407     39.0%
08/06/02      159,561    67,434    92,127     40.5%
08/13/02      155,040    66,546    88,494     39.9%

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 have added to long positions by 1300 contracts, while 
short contracts increased slightly.  Small traders also added to 
long contracts, increasing positions by 1200 contracts, while 
leaving shorts virtually unchanged.


Commercials   Long      Short      Net     % of OI 
07/23/02       37,204     43,601    (6,397) ( 8.0%)
07/30/02       38,163     47,343    (9,180) (10.7%)
08/06/02       41,014     50,025    (9,011) ( 9.9%)
08/13/02       42,303     50,354    (8,051) ( 8.7%)

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
07/23/02       12,756    11,152     1,604     6.7%
07/30/02       13,159     9,237     3,922    17.5%
08/06/02       11,547     8,782     2,765    13.6%
08/13/02       12,797     8,933     3,864    17.8%

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 have maintained the status quo, subtracting 600 
contracts from the long side and 400 from their shorts.  Small 
traders got decidedly shorter, dumping almost 3,000 long 
contracts and only 900 shorts.


Commercials   Long      Short      Net     % of OI
07/23/02       22,369    14,745    7,624      20.5%
07/30/02       22,429    12,811    9,618      27.3%
08/06/02       23,491    14,290    9,201      24.4%
08/13/02       22,837    13,833    9,004      24.6%
 
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
07/23/02        9,101    12,604    (3,503)   (16.1%)
07/30/02        6,778     8,999    (2,221)   (14.1%)
08/06/02        7,981     9,258    (1,277)   ( 7.4%)
08/13/02        5,050     8,349    (3,299)   (24.6%)

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 Net Bulls play))
===============

Maxim Integrated - MXIM - cls: 35.99 chg: -1.91 stop: *text*

Company Description:
Maxim Integrated Products is a leading international supplier of 
quality analog and mixed-signal products for applications that 
require real world signal processing. (source: company press 
release)

Why We Like It:

It's no secret that the chip sector has been weakening over the 
last year as demand for PCs has entered an extended period of 
moderate growth.  Most recently, one of Morgan Stanley's analysts 
cut estimates for Intel (Nasdaq:INTC), lowering 5-year earnings 
growth forecast by 3%, to 17%.  Further, Dell announced today 
that it would begin selling cheaper computers, attempting to 
increase its sales in a dwindling PC market.  Bottom line, the 
slow down in consumer demand for all electronic products has 
caused a hiccup in growth for chip makers...even analog 
manufacturers such as MXIM.  

After examining the broader picture of chip weakness, we now have 
a better understanding of why MXIM has been trading in a 
descending channel.  The stock has been in the current channel 
since late April, and has failed four times at descending 
resistance.  Each time MXIM has also tested the 50-dma at the top 
of its channel, the stock has not been able to break the trend.  
Also, three of the four times, the daily Stochastics (14,1,3) 
have been at or near the overbought region, signaling a potential 
loss in ascending momentum.  Currently MXIM is testing the top of 
the channel, the 50-dma, and bearish resistance on the p-n-f 
chart.  After touching the descending résistance yesterday, MXIM 
fell -1.91 points, or -5.03%.  Also, daily Stochastics are 
currently in the overbought region, and look as if they could be 
losing strength.  The newsletter will attempt to short sell this 
stock at channel resistance by putting a trigger one penny below 
today's low at $35.39.  If Maxim begins to buckle, and activates 
our hypothetical trade, we will put our stop four pennies above 
yesterdays high, at $38.51.  If the trade sets off in our favor 
we will designate our initial profit target at $30.10, just above 
support.       

For Annotated Chart: Click Here
Chart of: MXIM, Daily.




Picked on August  xth at $xx.xx <--- See text
Results since picked:     +0.00
Earnings Date          08/06/02 (confirmed)
 
Chart =





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     PremierInvestor.net Newsletter                  Tuesday 08-20-2002
                                                    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
=================================================================

In section two:

Net Bulls
  New Bearish Plays:     MXIM
  Bullish Play Updates:  CA, IBM, MIR, RX

Stock Bottom / Active Trader
  New Bearish Plays:     OIH, SBC
  New Bullish Plays:     NKE
  Bearish Play Updates:  AGN, CPG
  Bullish Play Updates:  MGG, NCEN, SWFT
  Closed Bearish Plays:  LMT

High Risk/Reward
  
  Bullish Play Updates:  FDRY
  

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

Maxim Integrated - MXIM - cls: 35.99 chg: -1.91 stop: *text*

Company Description:
Maxim Integrated Products is a leading international supplier of 
quality analog and mixed-signal products for applications that 
require real world signal processing. (source: company press 
release)

Why We Like It:

It's no secret that the chip sector has been weakening over the 
last year as demand for PCs has entered an extended period of 
moderate growth.  Most recently, one of Morgan Stanley's analysts 
cut estimates for Intel (Nasdaq:INTC), lowering 5-year earnings 
growth forecast by 3%, to 17%.  Further, Dell announced today 
that it would begin selling cheaper computers, attempting to 
increase its sales in a dwindling PC market.  Bottom line, the 
slow down in consumer demand for all electronic products has 
caused a hiccup in growth for chip makers...even analog 
manufacturers such as MXIM.  

After examining the broader picture of chip weakness, we now have 
a better understanding of why MXIM has been trading in a 
descending channel.  The stock has been in the current channel 
since late April, and has failed four times at descending 
resistance.  Each time MXIM has also tested the 50-dma at the top 
of its channel, the stock has not been able to break the trend.  
Also, three of the four times, the daily Stochastics (14,1,3) 
have been at or near the overbought region, signaling a potential 
loss in ascending momentum.  Currently MXIM is testing the top of 
the channel, the 50-dma, and bearish resistance on the p-n-f 
chart.  After touching the descending résistance yesterday, MXIM 
fell -1.91 points, or -5.03%.  Also, daily Stochastics are 
currently in the overbought region, and look as if they could be 
losing strength.  The newsletter will attempt to short sell this 
stock at channel resistance by putting a trigger one penny below 
today's low at $35.39.  If Maxim begins to buckle, and activates 
our hypothetical trade, we will put our stop four pennies above 
yesterdays high, at $38.51.  If the trade sets off in our favor 
we will designate our initial profit target at $30.10, just above 
support.       

For Annotated Chart: Click Here
Chart of: MXIM, Daily.




Picked on August  xth at $xx.xx <--- See text
Results since picked:     +0.00
Earnings Date          08/06/02 (confirmed)
 
Chart =



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

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

Computer Associates - CA - cls: 10.77 chg: -0.34 stop: 9.98 

Computer Associates received a boost yesterday by the broader 
market, and an announcement that the subsidiary ACCPAC 
International had released its New Pro Series Version 7.0 
Accounting Software.  However, with a widespread market decline 
today, the stock closed negative for the session.  Bulls have 
been encouraged by Computer Associates positive ascension of 
late, but are concerned that the daily Stochastics are extended 
into the overbought region.  The newsletter is going to leave the 
stop fairly conservative at 9.98, which is intended to give CA a 
slight bit of room to breathe if need be.  If our stop is 
triggered, the total anticipated loss could be 3.3%.   

Picked on August 15th at     $10.31 
Results since picked:         +0.46
Earnings Date              07/22/02 (confirmed)

Chart =


---

Intl Business Machines - IBM - cls: 81.27 chg: -1.22 stop: 78.99

Trading positive on the week, IBM pulled back today as the stock 
cooled off slightly.  Closing down -1.22, IBM had no company 
specific negative news, though Dell announced that it would begin 
selling cheaper computers.  Big Blue could be concerned as the 
daily Stochastics have levitated high into the overbought region.  
Our stop loss will remain at $78.99, as the newsletter attempts 
to give IBM room to wiggle.  Conservative investors could tighten 
their stop to just under $80.00 at $79.99, but could stand a good 
chance of being stopped out by doing so.    

Picked on August 15th at $75.06 
Gain since picked:        +6.21
Earnings Date          07/15/02 (confirmed)

Chart =


---

Millipore Corp - MIL - cls: 36.46 chg: -0.92 stop: 34.49 *new*

Yesterday, the Biotech Index struggled to hold ground as 
AstraZeneca (NYSE:AZN) plummeted with the disappointing 
announcement that the company's drug Iressa was not achieving 
expected results.  The domino effect weighted down shares of 
ImClone Systems (Nasdaq:IMCL), Genentech (NYSE:DNA), and OSI 
Pharmaceuticals (NYSE:OSI), all of which have similar drugs in 
development.  However, the Biotech Index BTK.X was able to 
recover some lost ground today, staging a +0.63% gain even though 
the broader markets closed negative.  In a press release this 
morning, Abgenix announced that there are fundamental differences 
between ABX-EGF and small molecule drugs such as Iressa.  The 
news helped to fuel today's rebound rally in the BTK.  Despite 
yesterday's news, MIL traded positive, though the company 
displayed poor relative strength in today's trading.  Given a 
potential pullback looming over MIL, the newsletter is going to 
raise its stop loss up to one penny below psychological and 
technical resistance at $34.50.    

Picked on August 16th at $36.60 
Results since picked:     -0.14
Earnings Date          07/16/02 (confirmed)
Chart =


---

IMS Health - RX - close: 17.19 change: -0.80 stop: 16.74

Yesterday, the newsletter closed half of its hypothetical 
position, while also notching up our stop up to $16.74.  As IMS 
trailed off today, we thought there could be a good chance we 
might be stopped out.  However, RX was able to find support 
slightly above $17.00, thus potentially alluding that bulls have 
not given up hope.  With no contemporary news surfacing in the 
present day, IMS Health's negative move can be attributed to 
weakness in the broader market.  The newsletter's stop will 
remain at $16.74 for the current portion of our position.

Picked on August 9th at $16.21  
Gain since picked:       +0.98
Earnings Date         07/15/02 (confirmed)

Chart =




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

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

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

Oil Service Hldrs Trust - OIH - cls: 54.18 chg: -2.82 stop: text*

Trust Description:
HOLDRS are trust-issued receipts that represent your beneficial 
ownership of a specified group of stocks. HOLDRS allow you to 
benefit from the ownership of the stocks in a particular 
industry, sector or group.
(source: company web site)

Why We Like It:

With speculation that war with Iraq could be looming over our 
heads, the price of crude futures have recently ascended to 52-
week highs.  In the last few weeks, oil inventories have also 
been at lows, with further conjecture that the U.S. government 
has been building up it Strategic Petroleum Reserves.  As a 
result, the Oil and Oil Service sectors have seen moderate 
recovery from July lows.  This afternoon, the American Petroleum 
Institute (API) announced an unexpected climb in last week's oil 
inventories.  The news pushed crude futures lower in after hours 
trading and could be the catalyst that adds selling pressure to 
the oil group.  Today's report indicated a 6.64 million-barrel 
increase in last week's inventories, while most data expects a 3 
million barrel decrease in tomorrow's weekly report.   

In light of potential inventory amplification, it is possible 
that the Oil Services sector could begin to see some profit 
taking.  The OIH is a Holders Trust that represents 18 oil 
services companies, and has rebounded 17% from the most recent 
relative low on August 8th.  The rally carried the OIH directly 
into the descending resistance trend line, the 50-dma, and the 
38.2% (see chart) Fibonacci retracement.  The OIH tried to break 
through resistance during the last three days, but could not find 
enough momentum to ascend into higher ground.  As a result, the 
OIH seems as if it could fall back into the descending range, 
potentially testing $45.00 again.  Also, daily Stochastics seem 
to be rolling out of the overbought region, and could be heading 
lower.  

Given today's API news, we are considering a hypothetical short 
at current levels.  However, because we will be marking our entry 
price on tomorrow's opening, the trade will be "conditional".  If 
the OIH gaps DOWN more than 65 cents on tomorrows opening, the 
newsletter will NOT add the short.  Our reasoning is that if this 
afternoon's news causes the Oil Services Index to drastically gap 
down, we do not want to be short on the bottom of what could be 
the beginning of a rebound.  Thus... we will ONLY add our short 
entry on tomorrows opening IF the OIH DOES NOT gap down MORE THAN 
65 cents.  If a position in the OIH is activated, we will put our 
initial stop at $57.01, just above near-term resistance and the 
50-dma.  Our initial profit target for OIH will be $47.50, where 
we hope to strike oil!  The OIH could see support in the $54.00 
area, but the bulls will have a tough time defending this level 
if the price of crude begins to fall.

For Annotated Chart: Click Here
Chart of: OIH, Daily.




Picked on August xth at  $xx.xx <--- See text 
Results since picked:     +0.00
Earnings Date                NA
 
Chart =



--- 

SBC Communications - SBC - close: 27.68 change: -2.19 stop: *text

Company Description:
SBC Communications Inc. is one of the world's leading data, voice 
and Internet services providers. Through its world-class network 
and its subsidiaries' trusted brands - SBC Southwestern Bell, SBC 
Ameritech, SBC Pacific Bell, SBC Nevada Bell, SBC SNET and 
Sterling Commerce - SBC companies provide a full range of voice, 
data, networking and e-business services, as well as directory 
advertising and publishing. (source: company press release)

Why we like it:
The recent broader market rally provided a much-needed respite 
for telecom bulls.  The IXTCX combined telecom index has rallied 
nearly 16% from its August 5th lows.  Is this bounce the 
beginning of a sustainable telecom uptrend, or simply another 
shorting opportunity?  With no clear signs that the group's 
business outlook will be improving anytime soon, we're definitely 
leaning towards the latter scenario. 
According to the point-and-figure charts at www.dorseywright.com, 
the telephone group is currently "bull alert", while the 
NASDAQ-100 is in "bull confirmed" territory.  This relative 
weakness provides tangible evidence that large institutions are 
still hesitant to put money in telecom stocks.  

Shares of SBC were slammed for 7.3% loss today after UBS Warburg 
downgraded the stock from "Buy" to "Hold."  The selling was 
backed by a brisk 10.5M shares.  Technically, it would be very 
difficult for the bulls to justify buying SBC at current levels.  
The stock has bumped off its descending trendline and was unable 
to stay above its 50-dma ($28.87) for more than two days.  
Investors who are sitting on gains from the recent rally will not 
be encouraged by these developments.  The stock is technically 
overbought, as shown by the daily stochastics (5,3,3).  The MACD 
is also bearishly leveling out just below the baseline.  Although 
the p-n-f chart is currently signaling a double-top breakout, the 
stock remains well below bearish resistance.  Given the negative 
technical picture and longer-term downtrend, we think SBC could 
eventually retest its July lows near $22.  Shorter-term traders, 
however, may want to target a move to psychological support at 
$25.00.  This play will not be activated until SBC falls under 
today's low of $27.50.  If we're triggered, our stop will be set 
at $30.01, just above yesterday's high and psychological 
resistance at $30.00.  More conservative traders could use a stop 
just above today's high of $28.87.

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

Chart =



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

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


Nike Inc - NKE  - cls: 44.80 chg: +1.22 stop: *text*

Company Description:
Nike Inc., headquartered in Beaverton, OR, markets its products 
in more than 100 countries and is the world's leading sports and 
fitness company.  (source: company press release)

Why We Like It:
The last five months have not been kind to shareholders of NKE.  
The stock has been marching steadily lower since it topped out 
near $64 in March.  Recent action, however, suggests that the 
long-term downtrend may be coming to an end.  At the very least, 
we think the stock is poised to move higher in the near future.  
NKE spent the last two weeks consolidating in a narrow range 
above its descending line of support.  This sideways trading 
action on rising volume indicates that a breakout could be in the 
cards.  Today's relative strength versus the Dow Jones is a sign 
that the bears may have exhausted themselves.  Our optimistic 
outlook is bolstered by the MACD, which just produced a bullish 
crossover from oversold levels.  Longer-term traders can also be 
encouraged by the weekly stochastics, which are just beginning to 
emerge from the oversold region.

By waiting to enter this play until shares trade at or above the 
relative high ($45.35), we're looking to capture a rebound to the 
$50.00 region.  This coincides nicely with the 38% retracement 
level from March highs to August lows.  The daily stochastics 
(5,3,3), which are beginning to fall from the overbought region, 
do present some concern for the bulls.  That's why we'll use a 
conservative stop-loss of $43.29 (two cents under today's low) if 
the play is triggered.  Interestingly, shares of RBK are already 
in a multi-week uptrend.  We suspect NKE will soon follow its 
competitor higher.  Once the stock gets above our entry point, 
there is no substantial overhead resistance posing an obstacle to 
our goal.

Picked on August xxth at $xx.xx <-- see text
Results since picked:     +0.00
Earnings Date          06/27/02 (confirmed)
 
Chart =



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

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


Allergan Inc - AGN - close: 56.92 change: -0.51 stop: 60.01

This short play was activated yesterday when AGN slipped under 
Friday's low.  Shares managed to rebound with the broader market, 
only to give a large chunk of those gains back during today's 
session.  The oscillators paint a neutral-to-bearish picture, 
with the MACD curling lower and the daily stochastics entering 
the oversold region.  The DRG.X pharmaceutical index has stalled 
near the 300 level and is looking somewhat top heavy.  A sell-off 
in the drug group could have AGN falling out of its recent 
consolidation range (shares traded an Inside Day on Tuesday) and 
testing the $55.00 level.  New short positions can be gauged on a 
break under yesterday's low of $56.50.  

Picked on August 20th at $56.59
Results since picked:     -0.33 
Earnings Date          07/24/02 (confirmed)

Chart =


---

Chelsea Property - CPG - close: 33.30 change: unch stop: 34.11

Shares of CPG have moved lower by a whopping 20 cents this week, 
as shares continue to trade in a narrow range.  Today's volume 
was the lightest in over three months.  That's not too 
surprising, considering that the stock finished the day 
unchanged.  At this point it's tempting to simply cut CPG loose 
(for a small loss) and move on to a stock that's more volatile.  
Technically, however, it appears that some selling pressure could 
be just around the corner.  The daily stochastics (5,3,3) are 
beginning to release from the overbought region.  This last 
happened in late-July, and heavy losses quickly followed.  For 
now we'll keep this play active, but our patience is wearing 
thin.  If CPG doesn't begin to follow the stochastics lower we'll 
probably give it the axe.

Picked on August 2nd at $32.68
Results since picked:    -0.62
Earnings Date         08/12/02 (confirmed)

Chart =



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

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

MGM Mirage - MGG - close: 36.87 change: -0.39 stop: 34.99

MGG set a new relative high of $37.85 on Tuesday morning, but was 
unable to maintain those levels in the face of a triple digit 
decline on the Dow Jones.  A broader market pullback could be 
expected after a strong uptrend over the past week, and the fact 
that MGG outperformed the Dow Jones bodes well for this play.  
Bulls can also be encouraged by the fact that today's decline was 
accompanied by relatively light volume of 715K shares.  
Aggressive entries can be gauged on a move above today's high, 
while more cautious traders may want to wait for shares to clear 
the $38.00 level.

Picked on August 19th at $37.02
Gain since picked:        -0.15
Earnings Date          07/24/02 (confirmed) 

Chart =


---

New Century Financial - NCEN - cls: 29.10 chg: -0.61 stop: 28.28

Although the past two sessions have seen NCEN roll from the 
$30.00 level, today's action could be viewed as a positive 
technical development.  Shares traded as low as $28.44 on an 
intraday basis and briefly violated the 50-dma at $28.53.  The 
subsequent bounce from this region may be indicative of a near-
term reversal.  The bears will certainly have their work cut out 
for them if they want to push NCEN back below the 50-dma.  Of 
course, where the stock heads next will likely depend on the 
broader market's ability to bounce back from today's pullback.  
New Century's daily stochastics are beginning to fall from 
overbought levels, but it's worth nothing that a similar pattern 
was seen in June, only to have the oscillators get pinned at the 
top of their range.  A move above Friday's high ($30.45) would 
provide a possible action point to open new positions.


Picked on August 16th at $30.16
Results since picked:     -1.06
Earnings Date          07/25/02 (confirmed)

Chart =


---

Swift Transportation - SWFT - cls: 18.40 chg: -0.30 stop: 17.64

SWFT came charging out of the gates on Monday and posted a 5% 
gain.  All things considered, the stock did a reasonably good job 
of maintaining those gains during today's session.  In the next 
few days we'll be watching for SWFT to rebound with the broader 
market and move above short-term resistance at $18.75.  New long 
entries can be considered if this occurs.  An alternate strategy 
would be to target pullbacks to the $18.00 area.  We'll also be 
watching how the Dow Transportation index (TRAN) behaves as it 
approaches resistance at 2400.  A break above that level would be 
a positive development for the entire sector.

Picked on August 19th at $18.01
Results since picked:     +0.39
Earnings Date          07/25/02 (confirmed)

Chart =



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

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

Lockheed Martin - LMT - cls: 63.59 chg: -0.45 stop: 63.35

The DFX.X defense index gave back 1.6%% on Tuesday and rolled 
over from its 50-dma.  Continued speculation that key Republican 
leadership may be balking at the Bush Administration's Iraq war 
plans seemed to pressure the sector.  LMT followed the defense 
group lower and violated our conservative stop-loss at $63.35.  
This play was closed for a 2.5% loss from our original entry 
point of $65.00 (Monday's opening price.)  Although we still like 
LMT as a bullish candidate on a longer-term basis, the flattening 
MACD and daily stochastic oscillators paint an uncertain 
technical picture.  Wall Street will no doubt be paying a lot of 
attention to Wednesday's launch of Lockheed's new Atlas 5 heavy-
lifting vehicle.  The stock could follow the rocket higher if 
everything goes smoothly.

Picked on August 16th at $65.00 
Results since picked:     -1.65
Earnings Date          07/18/02 (confirmed)
 
Chart =




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


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

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

Foundry Networks - FDRY - close: 9.44 change: -0.06 stop: 8.99

With no innovative news today, FDRY seemed to consolidate in 
light of weakness in the broader market.  Although this trade
 stands a good chance of being stopped out, the newsletter 
feels that protecting profits is a good strategy until the 
broader market further reveals its intended direction.  With 
both the daily Stochastics and the weekly Stochastics looking
 overbought, a potential pullback could be ahead for FDRY.  
Thus, we will leave our stop at its current area, just below
 technical and psychological support.         

Picked on August 9th at  $8.51 
Results since picked:    +0.93
Earnings Date         07/24/02 (confirmed)
 
Chart =




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

MSTRD   Microstrategy Inc.         12.38     +1.88
ADVP    Advance PCS                18.19     +0.56
FNF     Fidelity National          31.01     +0.55
TRR     Trc Companies              17.79     +1.69
INTL    Inter-Tel Inc.             25.00     +0.54
MBRS    Memberworks Inc.           16.49     +1.07

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

NEWP    Newport Corporation        18.25     +1.50
SFNT    Safenet Inc.               19.99     +1.84
NWRE    Neoware Systems            16.10     +1.15
LUME    Lumenis Ltd.                6.30     +1.86
TRR     Trc Companies              17.79     +1.69

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

THQI    Thq Inc.                   26.12     +1.13
HD      Home Depot                 30.25     +1.22
MCO     Moody's Corporation        50.78     +1.08
HAR     Harman International       49.83     +2.03
PYPL    Paypal inc.                23.10     +2.10
------------------------------------------- 
Breakout to Downside (Stocks over $20) 
------------------------------------------- 
Ticker  Company Name               Close     Change 

FRT     Federal Reality            26.00     -1.15
CBM     Cambrex Corp.              37.15     -1.73
KWD     Kellwood Co.               24.58     -1.52
AZN     Astrazeneca                29.65     -1.33
EV      Eaton Vance Corp.          25.10     -1.10

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

FNIS    Fidelity Natl Info Sol.    22.44     -1.53
LUFK    Lufkin Industries          28.17     -0.13
KWR     Quaker Chemical Corp.      21.24     -0.51
CRL     Charles River Labs         38.00     -0.35




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