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Daily Newsletter, Tuesday, 08/27/2002

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PremierInvestor.net Newsletter                 Tuesday 08-27-2002
                                                   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:      Tech Bulls Get Cold Feet
Market Sentiment: And So It Begins
Play-of-the-Day:  A Lack of Confidence

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U.S. Market Numbers
-----------------------------------------------------------------
MARKET WRAP  (view in courier font for table alignment)
-----------------------------------------------------------------        
      08-27-2002           High     Low     Volume Advance/Decline
DJIA     8824.41 - 94.60  9017.02  8782.03 1,48 bln   1276/1909
NASDAQ   1347.78 - 44.00  1396.40  1346.21 1,45 bln   1096/2303
S&P 100   471.15 -  6.44   482.13   468.56   Totals   2372/4212
S&P 500   934.82 - 13.13   955.82   930.36 
RUS 2000  397.45 - 10.28   408.88   397.45 
DJ TRANS 2383.36 - 41.20  2446.83  2378.11   
VIX        32.73 +  0.44    33.35    31.58   
VXN        50.01 +  1.59    51.50    50.65
Total Vol   3,127M
Total UpVol   840M
Total DnVol 2,258M
52wk Highs    91
52wk Lows    133
TRIN        1.57
PUT/CALL        .84
-----------------------------------------------------------------

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

Tech bulls get cold feet

Stocks traded lower as the past several sessions have seen the 
broader market averages trade up, then down, then up then down 
again in a pattern of consolidation.  This action isn't much 
different that today's economic data, which showed a surge in 
durable goods orders for the month of July, but economic 
bullishness from that report was offset by a somewhat 
surprisingly weak August consumer sentiment reading of 93.5, 
which was below economist's forecast of 97 and down from a 
revised 97.4 in July.

The consumer confidence reading was "surprising" partly because 
the S&P 500 Index (SPX.X) 934 -1.38% has recovered markedly from 
its July lows of near 800.  Many economists feel that stock 
market gains/losses will partially influence consumer confidence 
and the recent recovery in stock prices should have helped 
bolster confidence.

August's consumer confidence fell to its lowest level since 
November 2001, which appeared to dampen early morning enthusiasm 
that came from the largest jump in durable goods orders since 
October 2001.

Part of the consumer confidence survey, conducted by the 
Conference Board, showed the Present Situation Index also falling 
to 92.0 in August from 99.4 in July.  The Expectation's Index 
dropped to 94.5 from 96.1 in July.

Today's economic data received a very different response from the 
equity and Treasury bond markets.  While the equity markets 
seemingly disliked the data (I don't think this is the case and 
will explain later) the Treasury markets didn't like the data 
either and found selling in all the major maturities.

The reason I say "the Treasury bond market didn't like the data" 
was that today's selling in the Treasury market was a reaction to 
the thought that the economy, related to the durable goods 
numbers, was perhaps stronger than a bond bull would like and 
would have the Fed may not be as likely to cut interest rates in 
the near future.  Still, short-term interest rate futures 
contracts show investors seeing just a 25% chance for a central 
bank interest rate cut when the panel next meets on September 24.  
A few weeks ago, markets believed a rate cut was a sure thing as 
depicted by the 30-day Fed funds September 2002 futures (ff02u) 
98.27.  (simply take base of 100 and subtract 98.27, which gives 
you 1.73%.  Remember, current Fed funds rate is 1.75%).

30-day Fed Funds Futures (Sep. 2002) - Daily Interval




Often times, trader/investors hear or read "there's a X% chance 
the Fed will cut interest rates at its next meeting," and some 
wonder how the heck that statement is made.  If looking at the 
current Fed Fund Futures (q-charts symbol: ff02u) we can perhaps 
measure what the MARKET is betting on as it relates to the Fed 
funds futures.  I've tried to annotate on the above chart where 
Fed Funds were at on July 31st, when the very important GDP data 
was released and was much lower than economists' forecast.

If taken from a base amount value of 100, then the July 31st 
close of Fed funds futures had market participants thinking the 
Fed fund rate might be around 100-98.305 = 1.69% at the next FOMC 
meeting.  Considering the Fed will adjust interest rate policy in 
increments of 0.25, a rate at the then awaited August 13th 
meeting would have put Fed funds at 1.50%, so 1.69% was about a 
25% chance (take 1/2 or 50% of 0.25, then SUBTRACT if thinking 
Fed cut from 1.75, which gives you a 50/50 level between 1.50 to 
1.75 of 1.625%).  This is so difficult to try and explain when 
typing, but a 50/50, or 50% chance of a rate cut would have had 
Fed Funds Futures at 1.625%.  Therefore, the the July 31st Fed 
Funds close of 100-98.305= 1.69 would be interpreted as a 25% 
chance of a rate cut.

Now, see how after the GDP data on July 13th, and then the move 
higher to the relative high of August 7th, the MARKET predicted a 
more accommodative Fed as Fed futures rose, as if to think it was 
a "sure thing" that the Fed would be cutting rates?  Well, four 
sessions later, on August 13th, the Fed didn't cut rates and 
futures have been moving lower.  Even today most likely due to 
the stronger than expected durable goods data.

Now, it would appear that the Treasury markets partially IGNORED 
today's consumer spending numbers and put greater focus on the 
stronger durable goods data.

So why the WEAKNESS IN STOCKS if everything is rosy?

Intel Inside

I think today's weakness in stocks, especially technology 
sectors, was equity trader's "jitters" regarding consumer 
confidence, but MORE IMPORTANTLY the less than bullish comments 
coming out of semiconductor giant Intel's (NASDAQ:INTC) $17.18 
-5.23% CEO Craig Barrett and his word usage than included "modest 
growth" and "not confident."

This morning, Reuters reported that Intel's CEO Barrett told a 
news conference that the company sees more modest growth in the 
current third quarter than in its second-quarter and that the 
company hasn't seen much improvement in the computing environment 
because companies are not investing.

Then later in the day, Mr. Barrett participated in an interview 
with Bloomberg TV and indicated that he was not confident a 
holiday season uptick would materialize this year.

Ouch!  That's what I call "talking down your stock" and perhaps 
covering your rear as it relates to all of the scrutiny company 
CEO's are under recently.

In Thursday's market wrap 
http://www.PremierInvestor.net/markets/marketwrap/082202_1.asp
we thought Intel (INTC) was a "key stock" for traders to monitor 
and with the Semiconductor Index (SOX.X) having trouble at its 
50-day moving average, that a break below the 50-day in Intel 
(INTC) could have the sector beginning to unravel to the 
downside.

In essence, the "lack of SOX.X" bullishness, had "tech bulls 
getting cold feet" today.

Well... Friday's action had Intel breaking below its 50-day and 
and the move lower is underway.

As it relates to our play list, semiconductor "like stocks" has 
QLogic (NASDAQ:QLGC) $35.91 -3.5% and Maxim Integrated 
(NASDAQ:MXIM) $33.88 -5.67%.  The Semiconductor Index (SOX.X) 
316.87 -5.91% once again lead sector losers to the downside and 
helped drag the bulk of other technology sectors along for the 
ride lower!

Trade your targets first!

Now, the reason I "focused" a bit on Fed fund futures and the 
MARKETS perception that the Fed won't be cutting interest rates 
anytime soon is to instill the thought that BEARISH TRADERS need 
to trade their bearish targets still.

Don't get carried away and begin thinking... "oh boy, were going 
to take out the lows in the next day or two."

A reality check should have the bearish trader wondering why the 
MARKET even thinks the Fed wouldn't be cutting rates.  Once 
again, its been my thinking that the Fed cuts rates under 
weakening economic environment, "stands pat" on modest growth and 
low inflation, and raises rates under strong growth and 
potentially higher rates of inflation.

With Fed Funds futures basically "saying" no Fed easing, then a 
bearish trader needs to stick with a previously outlined plan and 
be looking to book some gains when targets are achieved.  

Heck, if you are "just certain" that a stock you shorted is going 
to take out its old low to the downside, then there really isn't 
anything wrong with coving 1/2 of the position when the stock 
hits your target (just for grins) and then hold the other half to 
some type of new target.  Then if you're WRONG, and the stock 
rebounds on some type of "good economic news" at least you 
partially stuck with your plan and made some profit.

Encouragement for tech bears

Of the major market averages that we noted in the past that had 
broken ABOVE their 50-day simple moving averages, today decline 
back BELOW its 50-day MA in the NASDAQ-Composite (COMPX) 1,347 
-3.15% is encouraging for the more heavily exposed to technology 
broader market index.

Once gain, technology looks to be leading to the downside.  First 
it was the Semiconductor Index (SOX.X) that had trouble with 
resistance at its 50-day MA, and now the broader NASDAQ Composite 
(COMPX) looks to be following.

NASDAQ Composite Index Chart - Daily Interval




If you've been a "believer" like me that technology stocks would 
be the first to show some signs of weakness and would not be a 
LEADER under the scenario of an economic recovery, then bears 
like the action as it relates to that scenario with the NASDAQ 
Composite (COMPX) 1,347 -3.15% being the first major market 
average to break back below its 50-day MA.

However, traders now begin to "understand" how a technology group 
like the semiconductors gave first "hint" to tech softening in 
the technicals found in that index around its 50-day MA.  Now 
that weakness appears to be "spilling over" into other technology 
sectors.

You can see some domino theory developing can't you?  But what 
about the S&P 500 Index (SPX.X) 934.82 -1.38%, which still trades 
ABOVE its 50-day MA of 923 and the Dow Industrials (INDU) 8,824 
-1.06%, which still holds above its 50-day MA of 8,772. 

No sir.  With the MARKET not looking like it expects a Fed rate 
cut right now, Treasuries seeing selling, and two of the stronger 
technically major market averages still holding above their 50-
day moving averages, a technology bear can't get overconfident 
here.  There's still some dominos that have to tip over to be 
getting further confident from the bearish side of things, so be 
willing to trade some bearish targets.

Key levels

Today's trading set up a clear level of support in the Dow 
Industrials at the 8,800 level on the Dow's point and figure 
chart set with a $50-box scale.  A trade at 8,750 would be a 
triple-bottom sell signal.  While this would not be used as it 
relates to Professor Davis' study of point/figure chart pattern 
percentages, a trade at 8,750 would be considered the first real 
sign of weakness in the Dow Industrials.

For the S&P 500 Index ($SPX) a trade at $930 with box size set at 
$5, would also be a triple-bottom sell signal and sign of 
weakness.  While most institutions view the index on a $10-box 
scale, the $5-box gives us the observation that support has been 
found just above 930, but a trade at 930 or below shows supply 
beginning to outstrip demand.

Jeff Bailey
Senior Market Technician
PremierInvestor.net


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

And So It Begins

This morning started out with good news on the durable goods 
front, which are large ticket items, such as cars and machinery.  
Durable goods orders rose 8.7% in July, the highest jump since 
October 2001. Combined with record new home sales and increased 
existing home sales, July appeared to have been a strong economic 
month, in spite of the market decline.   

However, later in the morning, Consumer Confidence was released.  
This showed a sharp decline, to 93.5 in August, from a reading of 
97.4 in July.  The news chipped away at the recent positive 
economic numbers, since Consumer Confidence is usually a 
reflection of consumers' willingness to spend.  This data teamed 
up with a Merrill Lynch  downgrade of 16 retail stocks, citing a 
lack of consumer spending and slow back-to-school sales, to take 
the wind out of the sails of  the recent good news.  The 
downgrades followed forecasts of lower sales by Wal-Mart, Sears, 
May Department Stores and Target.

On top of the disappointing Consumer Confidence number, which had 
been expected to come in at 97.1, Intel dropped a bomb on the 
tech sector.  CEO Craig Barrett said Intel was expecting modest 
growth over the third quarter and had not seen much improvement 
in the computing environment.  With a September 5th mid-quarter 
report around the corner, this sounded an awful lot like a 
warning.

Tech stocks are not the only ones who are looking at a sea of red 
lately.  The Congressional Budget Office projected that this 
year's deficit will be around $157 billion.  This was due to a 
decline in tax revenues and double digit increase in spending. 
The CBO does not see a surplus until 2006.

An interesting development, which is in contrast to recent 
activity, is the sell-off in the bond market today.  While this 
could be selling ahead of the upcoming bond auction, it is a 
change from what we have seen in the recent past.  As money has 
flowed out of equities, it has generally flowed back into bonds.  
Today, this was not the case, as both markets were hit.  This 
could be viewed as a bullish sign, as the bonds sold off after 
the durable goods orders were released, suggesting investors' 
intention to move money back into the equities.  

It is difficult to keep the  broad markets up when the world's 
largest chipmaker sounds a negative tone.  This was most likely 
the reason for today's sell-off, as the Nasdaq composite shed 
3.15% and the NDX shed 4.16%.  The semiconductor run appears to 
be over, as the Semiconductor Index (SOX.X) shed almost 6% and 
appears headed back below 300, after a rebound to 366.  it 
finished the day down 19.92 to close at 316.87.

The Dow and S&P 500 have held above their 50 day moving averages 
and have not yet broken the upward sloping trend line begun at  
the end of July.  The Nasdaq Composite, however, broke through 
the 50-dma to the downside for the first time since all four 
major indices broke above this average on August 19.  The same 
thing happened to the NDX.  For the past few years, the techs 
have led the rest of the market around by the nose.   Today's 
break of this support may foreshadow a sell-off in the other 
indices, as well.  While I have been talking about the support 
from the 50-dmas recently, I have also talked about a pre-
September 11 sell-off.  With that anniversary only two weeks 
away, any economic data that isn't particularly positive will 
give nervous investors another reason not to remain long heading 
into the anniversary.  We may be seeing the beginning of that 
sell-off.  Preliminary GDP later this week could provide the 
fulcrum for the market.  A growing economy could tip us toward 
another rally, or at least a holding pattern until after 
September 11.  If the number is disappointing, look out below. 

By Steven Price




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

Market Averages

DJIA ($INDU)

52-week High: 10679
52-week Low :  7702
Current     :  8824

Moving Averages:
(Simple)

 10-dma: 8882
 50-dma: 8772
200-dma: 9716

S&P 500 ($SPX)

52-week High: 1226
52-week Low :  797
Current     :  935

Moving Averages:
(Simple)

 10-dma:  940
 50-dma:  923
200-dma: 1068

Nasdaq-100 ($NDX)

52-week High: 1782
52-week Low :  892
Current     : 974

Moving Averages:
(Simple)

 10-dma: 1006
 50-dma:  986
200-dma: 1328


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

The Semiconductor Index (SOX.X): Intel dropped a bomb this 
morning on the sector.  Comments from the world's largest 
chipmaker indicated that there had not been much improvement in 
the computing sector, and predicted modest third quarter growth.  
These comments, combined with downgrades to the retail sector, 
seemed to indicate that not many PCs will be in Santa's sleigh 
this holiday season.  The index has given up almost 60% of its 
recent gains, since bottoming on August 5.  The sector led the 
NDX and Nasdaq Composite through their 50-dmas to the downside, 
and may be foreshadowing a broader market sell-off heading into 
the anniversary of September 11.

52-week High: 657
52-week Low : 282
Current     : 316

Moving Averages:
(Simple)

 10-dma: 341
 50-dma: 352
200-dma: 493
INSERT SECTOR SPECIFIC CONTENT HERE


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

Market Volatility

The VIX appears to have a solid floor on it at 30. We will most 
likely see this level hold until after September 11.  Over the 
next couple of weeks it is likely to creep up toward that 
anniversary, unless there is some Earth shattering positive 
economic data.  After Intel's negative comments this morning, and 
a drop in Consumer Confidence, we are not likely to see such 
numbers.  Once we cross that date, if there are no attacks or 
negative news, expect to see a large one day volatility drop.

CBOE Market Volatility Index (VIX) = 32.73 +0.44
Nasdaq-100 Volatility Index  (VXN) = 50.01 +1.59

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

          Put/Call Ratio  Call Volume   Put Volume

Total          0.84        368,167       310,812
Equity Only    0.69        310,073       213,603
OEX            1.24         19,088        23,738
QQQ            1.61          7,241        11,667

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

Bullish Percent Data

           Current   Change   Status
NYSE          45      + 1     Bull Confirmed
NASDAQ-100    58      - 2     Bull Confirmed
DOW           60      + 0     Bull Confirmed
S&P 500       60      + 1     Bull Alert
S&P 100       58      + 0     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  1.32
10-Day Arms Index  1.06
21-Day Arms Index  1.22
55-Day Arms Index  1.30

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 they do, they can signal significant market turning 
points.

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

Market Internals

        Advancers     Decliners
NYSE       1076          1686
NASDAQ     1016          2236

        New Highs      New Lows
NYSE         31              16
NASDAQ       22              49

        Volume (in millions)
NYSE     1,486
NASDAQ   1,483

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

Commitments Of Traders Report: 08/20/02

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 reduced both long and short positions by about 6000 
contracts, as can be expected during the end of summer, a 
notoriously slow time for the markets.  The got slightly longer, 
but by only 500 contracts.  Small traders added to positions 
slightly, with a net short increase of 500 contracts.


Commercials   Long      Short      Net     % Of OI 
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%)
08/20/02      422,100   469,556   (47,456)   (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
07/30/02      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%
08/20/02      156,974    69,071    87,903     38.9%

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 reduced both long and short positions slightly, with 
500 more reductions on the short side.  Small Traders also 
reduced slightly on both sides, with a net long reduction of 500 
contracts.


Commercials   Long      Short      Net     % of OI 
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%)
08/20/02       41,876     49,461    (7,585) ( 8.3%)

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

Small Traders  Long     Short      Net     % of OI
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%
08/20/02       11,321     7,980     3,341    17.3%

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 reduced long positions by about 1700 contracts, while 
adding 1500 to the short side.  This led to a reduction of over 
3000 contracts from their long positions.  Small traders added 
1200 to the long side, while reducing shorts by only 200 
contracts.  This led to a net reduction of 1300 short contracts.


Commercials   Long      Short      Net     % of OI
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%
08/20/02       21,160    15,349    5,811      15.9%

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
07/30/02        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%)
08/20/02        6,216     8,163    (1,947)   (13.5%)

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 non-tech play))
===============

Retail HOLDRS - RTH - close: 81.00 change: -1.72 stop: *text*

Company Description:
Retail HOLDRS are Depositary Receipts issued by the Retail HOLDRS 
Trust which represent your undivided beneficial ownership in the 
common stock of a group of specified companies that are involved 
in the retailing industry. (source: American Stock Exchange)

Why We Like It:
Conventional economic wisdom holds that the mild nature of the 
most recent recession was attributable to a resilient American 
consumer.  Even in the aftermath of the 9/11 attacks, consumer 
buying remained strong.  So what's the current state of consumer 
activity?  Today's economic data paints an uncertain picture.  
Durable goods orders saw an 8.7% increase, which was 
significantly more than the estimated 1.5% gain.  The strong 
demand for big-ticket items such as cars and high-end electronics 
is a seemingly positive sign for the economy.  The bond market 
appeared to key in on this data, as yields remained strong for 
most of the day.  However, the consumer confidence report 
provided a downside surprise.   The reading of 93.5 came in well 
below the consensus estimate of 97.0, representing a 3.7 decline 
from June's data.  The retail sector sold off on the news.  

How to reconcile this conflicting information?  It's not our aim 
to dissect the nuances of macroeconomics in this play 
description, but we believe the durable goods order can be viewed 
as a lagging indicator.  The data was culled during July.  
Consumer confidence, on the other hand, was taken during this 
month.  Thus, consumer confidence may be a more accurate 
representation of the current economic environment.  Something 
we'll be paying attention to as relates to this play is the 
forthcoming consumer spending data on August 30th.  A reading 
below the estimate of +0.7% would offer confirmation of today's 
negative confidence report.

The aforementioned retail sell-off has led to some interesting 
technical developments in the RLX.X retail index.  The RLX 
bounced sharply from the 260 region in mid-August and briefly 
popped its head above the 300 level.  Today's 1.8% decline was 
enough to drag the index back to 295, just below the 50-dma.  RTH 
is displaying a similar bar chart, having just closed under its 
50-dma at $81.24.  The declining daily stochastics (5,3,3) and 
flattening MACD are signs that more downside may be in store.  
The point-and-figure is bearish as well, with shares recently 
bumping off of bearish resistance.  We think this technical 
weakness, combined with continued uncertainty about the retail 
group's fundamentals, could conspire to take the RTH to the $72 
region.  Shorter-term traders could target a move to $75.00.  
We'll enter this play on a move under today's low of $80.71.  If 
triggered, our stop will be located at $83.56.

For annotated chart: click here
Chart of: RTH, Daily.



Picked on August xxth at $xx.xx <- see text
Results since picked:     +0.00
Earnings Date               N/A
 






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PremierInvestor.net Newsletter                  Tuesday 08-27-2002
                                                    section 2 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 two:

Net Bulls
  Bullish Play Updates:  MIL
  Bearish Play Updates:  MXIM, QLGC, SBC
  Closed Bullish Plays:  RX

Stock Bottom / Active Trader
  New Bearish Plays:     CB, COX, RTH
  Bullish Play Updates:  NCEN, NKE, SWFT
  Bearish Play Updates:  C, CL, PSS
  Closed Bullish Plays:  MGG

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 Play Updates
===============

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

Millipore Corp - MIL - cls: 36.85 chg: -0.94 stop: 36.45

With no new press on MIL today, the pullback may be attributed to 
broader market and sector weakness.  The Biotech sector has come 
under pressure since the Wall Street Journal reported yesterday 
that generic drug makers plan to lobby Congress for an FDA 
approval process assisting generic biologics.  As a consequence, 
the Biotech Index gave up -4.98% today, selling early in the 
morning.  Bears seem to have their paws on MIL for the time 
being, thus, it is possible that MIL could be stopped out in the 
next day or two.  However, keeping our stop tight at $36.45, the 
newsletter will attempt to minimize losses if the play falters.  

Picked on August 9th at  $37.02 
Results since picked:     -0.17
Earnings Date          07/16/02 (confirmed)



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

Maxim Integrated - MXIM - cls: 33.88 chg: -2.04 stop: 36.51 *new*

Providing yet another sign that the outlook for increased IT 
spending remains uncertain at best, Intel CEO Craig Barrett said 
today that "...we haven't seen much improvement in the computing 
environment because companies are not investing...When it turns 
around will be when companies start reinvesting.  I'm not 
forecasting when that will happen."  Hmmm.  If the world's 
largest semiconductor company doesn't see any upturn in business 
on the horizon, there's a pretty good chance that the smaller 
players in the group are suffering from a similar lack of vision.  
As could be expected, Barrett's comments pressured the entire 
chip sector on Tuesday.  The SOX.X continued to distance itself 
from its 50-dma and posted a 5.9% loss.  MXIM followed the index 
lower and gave back 5.6%.  This is a very encouraging development 
for our short play.  Shares sold off from resistance at the 
descending 50-dma ($36.36), broke through psychological support 
at $35.00, and closed at the lows of the day.  Given the 
downtrending oscillators (check out that MACD rolling from the 
baseline!) and sector weakness, we're expecting more downside 
action in the short-run.  Aggressive traders can add short 
positions on a decline from current levels, but keep in mind that 
our profit target sits at $30.10.  Also note that we've tightened 
our stop-loss to $36.51, above both today's high and the 50-dma. 

Picked on August 23rd at  $35.38
Results since picked:      +1.50
Earnings Date           08/06/02 (confirmed)




---

Qlogic - QLGC - cls: 35.91 chg: -1.31 stop: 38.76 *new*

Intel's CEO commented at a news conference today that his company 
has not seen any evidence of an improvement in tech-related 
spending, and then proceeded to say he wouldn't venture a guess 
as to business might start improving.  The implicit sector-wide 
lack of demand had the semiconductor index (SOX.X) dropping by 
5.9%.  QLGC performed somewhat better than the SOX but still 
suffered a 3.5% loss.  With shares closing near the lows for the 
day and the oscillators trending lower, odds of a continued 
decline seem strong.  The SOX.X is also displaying bearish 
oscillators and appears to be headed for a test of support at 
300.  Aggressive traders can think about taking new short 
positions if QLGC breaks under today's low of 35.61, but be aware 
of possible support at 35.00.  Based on the recent selling action 
we're going to tighten our stop to $38.76, just above the 50-dma.  
Longer-term traders may want to maintain a stop slightly above 
the relative high of $39.15.  We're also setting an official 
profit target at $30.51, just above the August lows.

Picked on August 23rd at $37.85 
Results since picked:     +1.94
Earnings Date          07/18/02 (confirmed)



---

SBC Comm. - SBC - cls: 26.56 chg: -0.09 stop: 28.51

With the IXTCX combined telecom index selling off by 3.5% on 
Tuesday, one would expect similar losses in shares of SBC.  The 
stock, however, outpaced the IXTCX and gave back only nine cents.  
There was no company-specific news to explain this relative 
strength.  Although today's action could be considered a victory 
for the bulls, SBC will have a tough time maintaining current 
levels if the IXTCX continues to slide lower.  If a sell-off does 
take hold, we'll be watching for shares to move under the 
relative low ($25.46) and break though the $25.00 level.  This 
would set the stage for a test of the August low at $24.60.  Due 
to these various levels of underlying possible support, we would 
not recommend entering new short positions at this time.

Picked on August 21st at $27.49 
Results since picked:     +0.93
Earnings Date          07/23/02 (confirmed)

 


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

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

IMS Health - RX - close: 17.64 change: -0.34 stop: 16.98 

IMS Health has been a good trade, but the stock is starting to 
look overextended and could be due for a correction.  The 
newsletter originally closed half of our position for a profit, 
and had intended to let the other half run.  However, in light of 
the daily Stochastics seeming overextended, we are opting to 
protect the positive move by closing the position at current 
levels.  Traders who wish to remain long should keep a close eye 
on the ascending support line, which could signal a pullback if 
breached.   

Picked on August 9th at $16.21  
Change since picked:     +1.43
Earnings Date         07/15/02 (confirmed)






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

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

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

Chubb Corp. - CB - cls: 63.00 chg: -0.50 stop: *text*

Company Description:
The Chubb Corporation was formed in 1967 and was listed on the 
New York Stock Exchange in 1984. It ranks among the top 10 
publicly traded insurance organizations based on revenues in the 
United States.  With more than 10,000 employees throughout North 
America, Europe, South America, and the Pacific Rim Chubb serves 
property & casualty customers from more than 132 offices in 33 
countries. Chubb works closely with 5,000 independent agents and 
brokers worldwide.  (source: company press release)

Why We Like It:
Two weeks from the anniversary of September 11th, the market 
might not see a vast amount of buying in the insurance sector. 
Specifically, Chubb could see some profit taking, as investors 
grow weary of another potential attack.  The stock has been 
descending in the current channel since May 17th, and recently 
failed at three points of resistance.  Chubb fell sharply during 
the month of July and hit a relative low of $53.06.  CB has since 
rebounded 18.7% from this level, rallying to the current price at 
63.00.  However, it appears that the stock has run into 
descending channel resistance, the 50-dma, and horizontal 
resistance at $65.00.  

With a decline of -1.06% in the Dow Jones today, CB fell -0.50 to 
close at 63.00.  The move could signal future weakness, supported 
by the daily Stochastics rolling out of the overbought region.  
Bears are further encouraged with the last two days providing a 
breach of the most recent ascending trend line.  

Our strategy for Chubb Corporation is fairly simple.  We will 
place a trigger at $62.49, one cent under today's low.  If the 
stock collides with our trigger and our position is activated, we 
will put our initial stop at $65.01.  The stop loss is just above 
shelf resistance and the whole number.  Our preliminary profit 
target for the position is at $58.50, though if the stock begins 
to slide with volume, we will quickly adjust our objective.  
Watch the $60.00-60.25 region, as it could prove to be support 
for bulls on the way down.  

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



Picked on August xxth at $xx.xx <-- See text 
Results since picked:     +0.00
Earnings Date          07/29/02 (confirmed)
 



---

COX Communications - COX - cls: 25.00 chg: -0.61 stop: *text*

Company Description:
Cox Communications, a Fortune 500 company, is a multi-service 
broadband communications company serving approximately 6.3 
million customers nationwide. Cox is the nation's fifth-largest 
cable television provider, and offers both traditional analog 
video programming under the Cox Cable brand as well as advanced 
digital video programming under the Cox Digital Cable brand. Cox 
provides an array of other communications and entertainment 
services, including local and long distance telephone under the 
Cox Digital Telephone brand; high-speed Internet access under the 
brands Cox High Speed Internet and Cox Express; and commercial 
voice and data services via Cox Business Services. Cox is an 
investor in programming networks including Discovery Channel.
(source: company press release)

Why We Like It:
After Bill Gates recently increased his holdings in COX by $600 
million dollars, the company's stock witnessed a 32% gain from 
the August 14th low.  Large investors have begun dolling out 
millions of dollars for cable companies attempting to gain a 
stake in the "wired world".  Although there is definitely 
something to be said for the future of cable, lackluster ad sales 
are currently hindering the recovery of many cable companies.  
Thus, the present economic conditions are still something that 
COX must contend with and could hinder immediate gains in the 
stock.  

Glancing at the daily candlestick chart, one can see that the 
stock has certainly had bearish pressure over the last two years.  
The catalyst for the sell-off has been poor advertising rates as 
the economy has contracted.  Trading with the trend, our 
technical analysis presents a further bearish picture.  After the 
most recent rebound, COX has rallied directly to the 50-dma, 
where it met with resistance.  COX has also discovered additional 
conflict from the descending channel and the whole number at 
$26.00.  Further, the daily Stochastics appear to be overextended 
and could release from the overbought region.  Bulls are also 
faced with an additional hurdle of simple market statistics.  
September has historically been a very bearish month for 
investors.  In light of probable bearish contributions to a 
potential decline in COX, the newsletter will consider a short 
position if the stock moves below today's low.  If triggered at 
$24.64, we will put a stop above the high four days ago at 
$27.02.  Our initial profit target for COX is $20.21, just above 
support at near term lows.  Note that we will NOT enter this play 
if COX opens below $24.00.   

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



Picked on August xxth at $xx.xx <-- See text 
Results since picked:     +0.00
Earnings Date          07/31/02 (confirmed)
 



---

Retail HOLDRS - RTH - close: 81.00 change: -1.72 stop: *text*

Company Description:
Retail HOLDRS are Depositary Receipts issued by the Retail HOLDRS 
Trust which represent your undivided beneficial ownership in the 
common stock of a group of specified companies that are involved 
in the retailing industry. (source: American Stock Exchange)

Why We Like It:
Conventional economic wisdom holds that the mild nature of the 
most recent recession was attributable to a resilient American 
consumer.  Even in the aftermath of the 9/11 attacks, consumer 
buying remained strong.  So what's the current state of consumer 
activity?  Today's economic data paints an uncertain picture.  
Durable goods orders saw an 8.7% increase, which was 
significantly more than the estimated 1.5% gain.  The strong 
demand for big-ticket items such as cars and high-end electronics 
is a seemingly positive sign for the economy.  The bond market 
appeared to key in on this data, as yields remained strong for 
most of the day.  However, the consumer confidence report 
provided a downside surprise.   The reading of 93.5 came in well 
below the consensus estimate of 97.0, representing a 3.7 decline 
from June's data.  The retail sector sold off on the news.  

How to reconcile this conflicting information?  It's not our aim 
to dissect the nuances of macroeconomics in this play 
description, but we believe the durable goods order can be viewed 
as a lagging indicator.  The data was culled during July.  
Consumer confidence, on the other hand, was taken during this 
month.  Thus, consumer confidence may be a more accurate 
representation of the current economic environment.  Something 
we'll be paying attention to as relates to this play is the 
forthcoming consumer spending data on August 30th.  A reading 
below the estimate of +0.7% would offer confirmation of today's 
negative confidence report.

The aforementioned retail sell-off has led to some interesting 
technical developments in the RLX.X retail index.  The RLX 
bounced sharply from the 260 region in mid-August and briefly 
popped its head above the 300 level.  Today's 1.8% decline was 
enough to drag the index back to 295, just below the 50-dma.  RTH 
is displaying a similar bar chart, having just closed under its 
50-dma at $81.24.  The declining daily stochastics (5,3,3) and 
flattening MACD are signs that more downside may be in store.  
The point-and-figure is bearish as well, with shares recently 
bumping off of bearish resistance.  We think this technical 
weakness, combined with continued uncertainty about the retail 
group's fundamentals, could conspire to take the RTH to the $72 
region.  Shorter-term traders could target a move to $75.00.  
We'll enter this play on a move under today's low of $80.71.  If 
triggered, our stop will be located at $83.56.

For annotated chart: click here
Chart of: RTH, Daily.



Picked on August xxth at $xx.xx <- see text
Results since picked:     +0.00
Earnings Date               N/A
 




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

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

New Century Fncl - NCEN - cls: 30.97 chg: +0.03 stop: 29.65 *new*

Given that the Dow closed down -94.60 and the Nasdaq lost -43.96 
in today's session, New Century Financial's relative strength 
seems rather encouraging.  The stock was able to post a small 
gain today while the broader markets took a dive.  Trading on the 
ascending trend line, NCEN could be fighting the daily 
Stochastics, which seem to be releasing from the overbought 
region.  The newsletter is going to "challenge" this position by 
moving our stop up to $29.65, three pennies below yesterday's 
low.  Bulls would like to see a move above $32.00 to indicate a 
potential breakout.  More aggressive traders might want to use a 
stop under the 50-dma at 28.71.       

Picked on August 16th at $30.16
Results since picked:     +0.81
Earnings Date          07/25/02 (confirmed)




---

Nike - NKE - close: 45.31 change: -0.59 stop: 43.74 *new*

With broader market pressure, bears grabbed hold of Nike today, 
pulling the stock down -1.28%.  With daily Stochastics attempting 
to release from the overbought region, and a possible bearish 
"engulfing pattern" forming, the newsletter is going to move our 
stop up to $43.74, endeavoring to additionally protect our trade 
if the market slides south.  A bearish "engulfing pattern" is 
where the current session's real body is larger than the 
previous.  This pattern is sometimes considered to be an 
important reversal pattern, though second day confirmation is 
usually needed to be sure.  Just in case bears do have their paws 
on Nike, new longs are not recommended at this time.  

Picked on August 22nd at $45.36 
Change since picked:      -0.05
Earnings Date          06/27/02 (confirmed)




---

Swift Trans. - SWFT - cls: 17.85 chg: -0.29 stop: 17.54 *new*

Swiftly up, and then swiftly back down again.  Initially we 
couldn't have been happier about this trade, as the stock moved 
towards $19.00.  However, during the last four trading sessions 
SWFT has declined, trading only 5 cents from our stop today.  At 
this time, the Premier Investor newsletter is going to lower the 
current stop.  This is NOT something we usually do, as we believe 
traders should rarely (if ever) let a loss grow.  However, in 
this case we are going to lower our stop 10 cents to $17.54.  Our 
reasoning is that there is shelf support in the $17.60-62 area, 
and we do not want to have our stop above that level.  Thus, 
lowering our stop just below horizontal support, we give our play 
an opportunity to hold the $17.60 area and rebound.  We WILL NOT 
lower the stop again, and will close the ENTIRE hypothetical 
position if $17.54 is violated.    

Picked on August 19th at $18.01
Results since picked:     -0.16
Earnings Date          07/25/02 (confirmed)




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

Citigroup Inc - C - close: 34.20 change: -0.20 stop: 35.66

Salomon Smith Barney, Citigroup's investment banking unit, 
admitted last night that it had given thousands of shares in 
IPO's to various WorldCom executives.  While this was certainly 
not a positive development, today's action suggests that the news 
may have already been priced into C.  The stock outperformed the 
Dow Jones and finished the session with a 20-cent loss.  Volume 
was somewhat light at 14.8M shares, suggesting a lack of 
intuitional participation.  Technically, C remains weak.  Shares 
have not attempted to move above the descending 50-dma ($35.35), 
and near-term resistance seems to have formed in the $34.50-
$34.70 region.  The MACD and daily stochastic oscillators also 
hint towards further weakness.  If C heads lower, a move under 
the relative low at $33.40 might provide an action point to enter 
new bearish positions.  However, note that possible support lies 
at $33.00.

Picked on August 26th at $33.49
Results since picked:     -0.71
Earnings Date          07/17/02 (confirmed)




---

Colgate Palmolive - CL - cls: 54.07 chg: +0.81 stop: 55.01

Shares of CL were bid higher by 1.5% today, despite a 1.0% 
pullback in the Dow Jones.  The stock appeared to benefit from 
this morning's economic data.  Durable goods orders rose 8.7% in 
July, representing the largest increase since October 2001.  Wall 
Street analysts expected a gain of only 1.5%.  Although today's 
relative strength was impressive, the technical picture remains 
bearish.  CL did not approach solid resistance at the 200-dma 
($54.87).  The MACD has just produced a bearish crossover from 
very high levels, and daily stochastics continue to make their 
way lower.  In the absence of any new data to prop up the stock, 
shares may begin to follow the broader market lower.  Traders 
looking to add to short positions can continue to watch for a 
move under Monday's low of $52.76.

Picked on August 26th at $53.59
Results since picked:     -0.48
Earnings Date          07/23/02 (confirmed)




---

Payless Shoesource - PSS - close: 52.79 change: -1.20 stop: 55.68

Retail-related issues were pressured by this morning's release of 
the latest consumer confidence report.  The reading of 93.5 was 
less than the consensus number of 97.0, and 3.7% below June's 
result.  Faced with the prospect of a non-spending consumer, 
investors hit shares of PSS for a 2.2% loss.  This decline is 
exactly what we wanted to see from our short play.  Volume was 
the strongest in over a week, and PSS closed near the worst 
levels of the day.  Meanwhile, the RLX.X retail index gave back 
1.8% and closed below its 50-dma.  With the sector looking weak 
and the stock's daily stochastics plummeting from overbought 
levels, we're anticipating continued selling in the short-term.  
A move under today's low at $52.70 may provide an action point to 
open new bearish positions.  Be aware, however, that shares may 
find support near the $50.00 region.

Picked on August 26th at $52.99
Results since picked:     +0.20
Earnings Date          08/14/02 (confirmed)





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

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

MGM Mirage - MGG - close: 34.50 change: -1.79 stop: 34.99

After announcing that the M G M Mirage plans on expanding the Las 
Vegas luxury resort Bellagio to the tune of $373 million dollars, 
MGG stumbled in today's trading session.  The planed expansion 
frightened investors as MGG dropped -4.93% on the day to close at 
$34.50.  Our play was closed when the stock hit our stop at 34.99 
in the mid-afternoon.  Today's sell off instigated a 5.4% loss 
for bulls long at 37.02.  Traders still long MGG are urged to be 
cautious, as the stock could see further selling.  The 200-dma 
could hold as support at 33.38, though the daily Stochastics have 
fallen quickly out of the overbought region.  

Picked on August 19th at   $37.02
Results since picked:       -2.03
Earnings Date            07/24/02 (confirmed)
 




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

THER    Therasense Inc.            17.54     +1.39
SGDE    Sportsman's Guide Inc.      7.70     +0.57
MRBK    Mercantile Bankshares      41.15     +0.60
AHC     Amerada Hess               74.07     +0.86
SWC     Stillwater Mining           9.60     +0.56
AGM     Federal Agriculture        28.01     +1.25

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

MATK    Martek Biosciences        17.97     +2.42
THER    Therssense Inc.           17.54     +1.39
NOR     Northwestern              16.20     +2.10
TIER    Tier Technologies         19.25     +1.65

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

EASI    Engineered Support Sys.    50.49     +3.71
MANT    Mantech International      54.90     +1.70
DCI     Donaldson Co.              37.14     +1.34

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

HRS     Harris Corporation         32.29     -1.27
DLTR    Dollar Tree Stores         25.12     -2.98
CECO    Career Education           41.95     -2.65
ANN     Ann Taylor Stores          26.50     -2.19
USPI    Utd Surgical               28.56     -1.30
ATVI    Activision                 28.74     -2.49
COST    Costco Wholesale           32.72     -2.08

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

WPO     Washington Post            645.00    -19.20
URBN    Urban Outfitters           27.00     -0.85
AGY     Argosy Gaming              27.91     -0.69
KSS     Kohl's Gaming              69.27     -2.12
EDS     Electronic Data Systems    39.99     -0.91
WSM     Williams Sonoma Inc.       22.65     -2.31
COLM    Columbia Sportswear        36.65     -1.65
GILD    Gilead Sciences            33.20     -3.04
ZBRA    Zebra Technologies         54.55     -0.79
HHH     Internet Holders Trust     20.78     -0.37




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