Option Investor

Daily Newsletter, Wednesday, 08/28/2002

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PremierInvestor.net Newsletter              Wednesday 08-28-2002
                                                  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:      Cautious
Watch List:       CHIR, DIA, FE, KLAC, SHW and more...
Play of the Day:  Banking on Weakness

MARKET WRAP  (view in courier font for table alignment)
08-28-2002               High     Low     Volume Advance/Decl
DJIA     8694.09 -130.32 8823.99  8646.19 1371 mln  773/1965
NASDAQ   1314.38 - 33.40 1340.01  1312.25 1338 mln  955/2231
S&P 100   462.53 -  8.62  471.15  459.99   totals   1728/4196
S&P 500   917.87 - 16.95  934.82  913.21
RUS 2000  389.38 -  8.07  397.45  389.38
DJ TRANS 2313.38 - 69.98 2382.64  2299.00
VIX        36.23 +  3.50   36.96  33.88
VIXN       54.70 +  4.69   56.26  51.53
Put/Call Ratio 0.88

Market Wrap

Bulls couldn't make progress in today's session as the NYSE fell 
-130.32 to close at 8694.09.  The Nasdaq followed suit, declining 
-33.40 to 1314.38, and the S&P 500 stumbled -16.95 finishing the 
day at 917.87.  NYSE advancing issues totaled 773 versus 1965 
decliners.  The Nasdaq witnessed 954 over-achievers and 2223 
spoilers.  Market volume continued to weigh in lightly with 1.3 
billion shares traded on both the NYSE and Nasdaq.  

Nortel Networks (NYSE:NT) announced today that the company would 
be laying off 15% of its workforce, which translates to 7,000 
jobs.  Further, Hewlett-Packard (NYSE:HWP) pointed out that tech 
spending still remains near the trenches.  Bottom line, 
confidence in technology based businesses still remains weak with 
demand yet to increase for IT products.

Prudential Financial nicked its fiscal 2002 earnings estimates on 
behalf of Intel (NYSE:INTC) for the remainder of this year and 
2003.  The Prudential Analysts' are currently traveling in 
Taiwan, attempting to decipher company specific outlooks.  The 
Prudential analyst Hans Mosesmann also cut fourth quarter 
estimates on Advanced Micro Devices (NYSE:AMD), stating a worse 
than expected supply overhang in China. 
Indictment hoe!  Scott D Sullivan (former WorldCom CFO) was 
indicted on charges that he allegedly helped to architect the 
multibillion-dollar accounting fraud that led to WorldCom's 
bankruptcy.  The ex-CFO was also accused of making false 
statements to the SEC along with former WorldCom director of 
accounting Buford Yates Jr.  Federal prosecutors allege that 
Sullivan and Yates (along with three other un-named suspects) 
made false entries into the WorldCom ledger, attempting to meet 
analysts' expectations.    

The ABC News/Money magazine survey of consumer comfort came in 
flat at -11 for the most recent week.  The good news is that 
consumer comfort did not falter in light of weaker than expected 
consumer confidence numbers yesterday.  However, overall 
confidence remains near a six-year low, which alludes to greater 
uncertainty of the overall market.  With mortgage re-financing at 
highs, consumer retrieval of gained equity on real estate, 
spending ought to be higher than the numbers are reporting.  
Conversely, because the stock market is at such low levels, and 
the labor markets are still in disarray, consumers are opting to 
save instead of splurge.

The MBA Mortgage Applications Survey reported that mortgage and 
re-financing demand declined slightly from last week's high.  
Even with the drop, this weeks numbers are the second highest 
ever, only behind the previous week of August 16th.  Re-financing 
and purchasing applications have now exceeded the surprisingly 
strong numbers of November 2001.  Thus, when we talk about a 
decline, we are talking about a pullback from historical highs.  
Leading the decline this week were purchasing applications, which 
fell by 7% from the prior week.  The 30-year fixed mortgage loan 
fell by two points to 6.16%, down 64 basis points from one year 
ago.  Overall, the housing market remains incredibly robust, with 
this week's decline hardly even making analysts wince. Continued 
re-financing should aid consumers in strengthening their personal 
balance sheets and obtaining added expendable income.   
Uncomplicated access to financing and low mortgage rates has made 
the real estate market the investment du jour.  Of slight 
concern, the drop in the purchasing index indicates that home 
prices could begin to assuage if demand does not begin to pick 
up.  One possible reason for the softening in purchasing 
applications could be the substantial increase in home prices 
over the last few months. Some "would be" homeowners are being 
edged out of the market by higher sticker prices.  While demand 
for homes remains broadly stout, a more modest pace of 
applications is expected for the near future.  However, the 
important number to remember is 7%.  Once interest rates rise 
above 7%, demand could quickly taper, and may well cause a 
pullback in the real-estate market.  Metro and costal areas that 
have viewed rapid appreciation of housing prices could be 
impacted greater than rural communities. 

The American Petroleum Institute (API) and the Energy Information 
Agency (EIA) reported weekly oil and gas inventories today.  
Crude inventories increased +0.3 according to the EIA and +2.9 by 
the API.  Both agencies also reported that distillate inventories 
and gasoline inventories decreased.  The reports are neutral to 
bearish for crude, flat for gasoline, and neutral to bullish for 
distillates.  Increased imports helped crude inventories to 
swell, though high demand for gasoline during the driving season 
caused gasoline inventories to decline.  Distillate inventories 
decreased with nearly 4 million bpd used over the last week.  In 
light of potential supply issues, the current "war premium" is 
figured at roughly $6.00 per barrel.  Although the U.S. presently 
has adequate inventories of gasoline and distillates compared to 
a year ago, the cushion could quickly be eroded if a supply speed 
bump were to be encountered.  However, OPEC is currently 
overproducing at a rate of 2 million barrels a day, exceeding 
existing quotas.  Supply is the main concern of oil enthusiasts, 
as demand will certainly not slow with the winter approaching.  
Further, continued talk of a strike on Iraq, and lack of support 
for quota increases by OPEC president Rilwanu Lukman, could have 
oil futures enduring in the $28.00 per barrel area.  OPEC's 
contemporary range for oil is $22-28.00; clearly the market is 
paying a premium because of supply side fears.  If Middle East 
tensions are miraculously relieved, supply issues could quickly 
fade, causing the price of oil to rapidly decline.  All eyes are 

Revisiting the decrease in distillates...  A continued decline in 
distillate inventories could indicate manufacturing growth, as 
many distillates and distillate by-products are used to create 
consumer products.  For example, distillates are separated from 
crude to assist in creating products like plastic and polyester.  
Products derived from chemicals containing oil distillates 
include: Velcro, Silly Putty, polyethylene, rubber, PVC, Saran, 
Teflon, Nylon, Rayon, Cellophane, Bakelite, and Celluloidä.  
Watch for the next set of Industrial Production numbers on 
September 17th to improve if verification of manufacturing 
expansion is to surface.   

Fuel for Thought

I would quickly like to revisit a few sentences from a previous 
wrap on July 17th 2002.

"...let's talk about jet fuel... Yes, jet fuel. Last week, the 
market reported that part of the rational behind the decline in 
oil stocks was due to the decrease in demand of jet fuel by 
commercial airlines. However, the oil and gas inventory numbers 
today point out that jet fuel refinery production is up to 1.6 
million barrels per day. This is the HIGHEST level of production 
since September 11th. So then, we have a lack of demand, but 
increased production? The speculation is that the U.S. Government 
has been buying and storing jet fuel for a possible (some say 
anticipated) attack on Iraq."

As of today (Wednesday the 28th), jet fuel is still being 
produced at a rate of 1.6 million barrels per day.  It's true 
that a good portion of this is due to the summer traveling 
season.  However, military production continues to increase over 
this time last year.  

          PRODUCT            Week of August   02  09  16  23  
Military Jet Fuel.......................     152 128 182 160  
Military Jet Fuel PADD 1................       0   0   0   0  
Military Jet Fuel PADD 2................       6  15  16  15  
Military Jet Fuel PADD 3................     118  89 127 106  
Military Jet Fuel PADD 4................       4   4   5   5  
Military Jet Fuel PADD 5................      24  20  34  34  
Military Jet Fuel 4-WK AVG..............     168 156 157 156  
Military Jet Fuel PADD 1 4-WK AVG.......       0   0   0   0  
Military Jet Fuel PADD 2 4-WK AVG.......      17  17  16  13  
Military Jet Fuel PADD 3 4-WK AVG.......     108 102 110 110  
Military Jet Fuel PADD 4 4-WK AVG.......       4   4   4   5  
Military Jet Fuel PADD 5 4-WK AVG.......      39  34  27  28  

Source: EIA summary of weekly petroleum data for week ending 
August 23, 2002.  

Regarding Technicals

Today's market witnessed declines across the board.  One of the 
only positive notes was the U.S. Dollar, which was able to close 
positive +0.35 cents, finishing at 107.12.  The Greenback has 
been under pressure over the last three trading sessions, but has 
found support on the 50-dma at $106.82.  Potentially in a 
consolidation phase, we would like to see the greenback gain 
momentum to feel as though foreign investors trust the dollar 
once again.  

Treasuries were paid a visit from buyers, as the 30-year yield 
lost -0.58, closing at 5.009% and the 10-year yield declined 
-0.64 to finish the session at 4.218%.  

As previously mentioned, the Market Volatility Index (VIX.X) 
could move higher.  Daily Stochastics recently recoiled into the 
oversold region, and have begun trending upwards in the last two 

Chart of: Market Volatility Index, Daily.  


Chart of: Gold, Daily.  


Gold has been consolidating for the last few months, and has 
recently held support on the ascending trend line.  A breach of 
the 50-dma (on the upside) could indicate further flight to 
safety.  Daily Stochastics are mid-range, and do not help to 
indicate the future direction of the precious metal.  The $315.00 
region seems to draw attention, as the breakout above $315.00 
last May, was followed by a temporary move above $330.00.  The 
consolidation triangle (highlighted by red ascending and 
descending lines) will be an important factor to watch for a 
change in trend.  

Chart of: Semiconductor Index, Daily. 


Today's news on Intel and Hewlett-Packard did not bode well for 
bulls in the semiconductor index (SOX.X).  The SOX recently 
failed at descending resistance and the 50-dma.  With mid-quarter 
reports being dispersed by several companies over the next few 
weeks, the sector could see additional selling if future guidance 
remains gloomy.  Daily Stochastics are entering the oversold 
region, and could bring auxiliary technical bears off the fence.  
Regrettably, until companies begin to see potential revenue 
growth, the SOX might continue to head south.  However, I would 
like remind investors that sometimes, it is darkest just before 

Over all, the market seems to have unearthed weakness in the last 
two trading sessions, and bears could be poised for a statistical 
drop in the final two days of August.  As Jeff Bailey pointed out 
in today's mid-day update, 
the concluding two days of August are historically very bearish.  
In fact, according to the Stock Traders Almanac the "last two 
days of August (have been) murderous five years in a row".  Also, 
the Almanac points out that the historical change in September 
since 1950 is -0.6%, with 19 positive months and 32 negative 

Bears could definitely be waiting in excitement for the next few 
weeks to arrive.  Will they be fulfilled, or will bulls hold 
their ground?  Tomorrow will certainly bring a piece of the 
puzzle, as the U.S. Bureau of Economic Analysis' releases the GDP 
numbers in the morning.  

In terms of technical analysis, cautious bulls would like to see 
Treasuries sell, gold taper, the VIX falter, and financials 
rally...before dedicating further capital.  Bears will probably 
be looking to trade with the trend, attempting to catch the 
downside momentum in the SOX, and GSTI Software Index (GSO.X).  
Short traders are additionally encouraged with the Nasdaq 
Composite closing below the 50-dma at 1314.38.  Further, the 
Nasdaq 100, S&P 500, Oil index (XOI.X), DJ US home Index 
(DJUSHB), CBOE GSTI Software Index (GSO.X), Combined Telecom 
Index (IXTCX), S&P Retail Index (RLX.X), and the Oil Service 
Sector Index (OSX.X) all fell below their 50-dma's today.  Also, 
Point & Figure chartists will notice that the Dow and the S&P 500 
gave triple bottom sell signals today.  8750 has served as 
support for the Dow in recent trading, but in today's session, 
when the Dow tried to trade above 8750, bears held the index 
down.  Keep in mind two things: 1. Volume has been very light, 
and 2. We are about to enter the last to days of August.  With 
tomorrow's release of the GDP numbers, employment data, and Alan 
Greenspan making comments in the morning, investors should 
proceed with caution and watch for volume!  
Mark Whistler	

Questions or comments?


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


Chiron Corp - CHIR - close: 38.44 change: -1.23

WHAT TO WATCH: CHIR exploded from its July lows near $26.50 and 
gained more than 60% in less than a month.  With the daily 
stochastics falling and the MACD about to cross at very high 
levels, a pullback to psychological support at $35.00 (or even 
the 50-dma at $34.13) seems likely.  Biotech giant AMGN received 
a boost on Wednesday morning after the European Commission green-
lighted two of its drugs.  Prior to last Friday, this news alone 
probably would've sent the biotech group trading higher.  The 
biotech index had been in a multi-week uptrend and briefly popped 
above the 400 level.  However, recent action has seen the BTK 
begin to retrace those gains.  CHIR is likely to lead the way if 
the index head towards the August lows at 330.  Bearing in mind 
that there's some possible congestion in the $37-$38 range, short 
entries can be gauged on a move under $38.00.

Chart =


Diamonds Trust - DIA - close: 87.08 change: -1.42

WHAT TO WATCH: If you've read tonight's Market Wrap, you're 
already aware that the Dow Jones produced a triple-bottom point-
and-figure sell signal today.  That's not a good 
sign...Especially considering that the index recently failed to 
move above bearish resistance!  Today's close under the 50-dma 
(8750) is a negative technical development that could lead to 
more selling in the near-term.  The Dow's MACD is looking bearish 
as well, with the indicator beginning to roll near the baseline.  
The last time this happened (late-May), a brutal two-month 
downtrend ensued.  A similar decline may or may not be in the 
cards, but short-term traders could be looking for a retest of 
the August lows near 8050.  Short entries in the Dow Jones 
tracking stock (DIA) could be targeted on a move below today's 
low (86.58) or a rollover from the 50-dma at $87.62.  On a more 
fundamental level, the broader market will probably have a tough 
time posting any sizable gains ahead of the 9/11 anniversary.

Chart =


eBay Inc - EBAY - close: 55.37 change: -1.83

WHAT TO WATCH: We strongly considered adding EBAY as a short play 
last night, but bullish p-n-f support at $55 ultimately convinced 
us to hold off.  The bears certainly had their way with the stock 
today, as EBAY declined by 3.1% and underperformed the NASDAQ.  
Investors did not appear to be pleased with today's news that the 
company had bought out an Australian Partner for $65 Million.  
Technically, EBAY is looking awfully weak.  The MACD is in the 
early stages of a bearish crossover and daily stochastics (5,3,3) 
are headed towards the lower band.  The p-n-f support mentioned 
above may very well help to put a floor under the stock.  
However, a break under $55.00 could give aggressive traders a 
chance to open short positions.  The July lows near $51 provide a 
possible near-term profit-target.

Chart =


FirstEnergy Corp - FE - close: 34.67 change: +0.52

WHAT TO WATCH: FirstEnergy announced on Monday that they were 
anticipating 2003 earnings to come in at the $3.70-$3.90 range.  
This represents an increase over the consensus estimate of $3.58.  
This news has helped to keep shares of FE above the 200-dma at 
$33.92.  Shares outperformed the Dow Jones today and rose 1.5% on 
the strongest volume in two weeks.  These are indications that 
the stock may soon stage a breakout above resistance at $35.00.  
Such a development could eventually lead to a retest of the 2002 
highs near $39.  Long entries can be evaluated on a move above 
the July high of $35.12.  Oscillators are overbought, so be sure 
to keep tight stops. 

Chart =


KLA-Tencor - KLAC - close: 33.34 change: -0.86

WHAT TO WATCH: With the SOX.X semiconductor index selling off 
sharply from its 50-dma, there is no shortage of possible bearish 
plays in the chip sector.  KLAC looks especially compelling.  
Shares have broken under short-term support near $35.00 and are 
trading at multi-month lows.  Today's action created a quadruple-
bottom breakdown on the p-n-f chart, and the MACD just produced a 
bearish crossover.  Bulls will argue that daily stochastics have 
already reached the lower band, but with the SOX.X looking like 
it wants to test its July lows near 285, this oscillator could 
easily remain pinned in the oversold extreme.  The 52-week lows 
in the $29-$30 region provide a short-term profit target to aim 
for.  Bearish entries can be considered if KLAC falls under 
today's low of $33.23.  Tomorrow's mid-quarter update (after the 
bell) from fellow chip-maker NVLS will likely have a large impact 
on KLAC, so traders may want to wait until Friday before placing 
any bearish bets. 

Chart =


Sherwin Williams - SHW - close: 26.65 change: -0.62

WHAT TO WATCH: Who spilled the red paint?!  After briefly spiking 
above $30.00 nine days ago, SHW has seen nothing but weakness.  
Although the stock is already looking oversold, recent strong 
volume indicates that more downside is in store.  The recent 
bearish MACD crossover bolsters the negative outlook.  Aggressive 
short-term traders could watch for a move under today's low of 
$26.50.  This would clear the way for a test of bullish p-n-f 
support at $25.00.  A continued decline in the broader market 
could see SHW break though that level and move toward the 2002 
low at $23.50.

Chart =


Staples Inc - SPLS - close: 12.97 change: -1.01

WHAT TO WATCH: Office Depot announced this morning that back-to-
school sales are thus far below expectations.  This news seemed 
to provide a perfect excuse for investors to bail of out of SPLS.  
Shares got whacked for a 7.2% loss and closed at levels not seen 
since last October.  Volume was extremely heavy; today's reading 
of 13.2M was the highest in over a year!  Given the accelerating 
downside momentum, double-bottom p-n-f breakdown, and lack of 
underlying support, SPLS appears to be on a crash course with the 
September low of $11.02.  Short-term traders could target a move 
to this level, with a break of today's low ($12.86) providing a 
possible action point.  Of course, if Staples releases bad news 
of their own (certainly not out of the question, judging by 
today's volume), there's no telling how far the stock could fall.

Chart =


Symantec Corp - SYMC - close: 30.04 change: -0.60

WHAT TO WATCH: Today's Legg Mason upgrade of SYMC fell on deaf 
ears.  Pressured by a hefty 3.6% decline in the GSO.X software 
index, shares of the computer security company gave back nearly 
2%.  If the sector downtrend continues, SYMC may fall below 
critical long-term support in the $29-$30 area.  A trade at 
$29.00 will create a spread-triple sell signal on the point-and-
figure chart.  Traders can think about legging into short 
positions if this occurs.  Although such a breakdown may prove to 
be a bear trap, a continued sell-off in the software group could 
quickly have SYMC falling to the next level of psychological 
support at $25.00.

Chart =


QUALCOMM - QCOM - close: 27.31 change: -1.27

WHAT TO WATCH: QCOM has proven to be somewhat resilient over the 
past few months, with shares repeatedly gravitating towards the 
$30.00 region.  The recent sell-off from this level has led to 
the possibility that shares may retest the relative lows near 
$24.00.  QCOM underperformed the NASDAQ today and closed under 
the 50-dma at $27.56.  Bearish action in the MACD and daily 
stochastics (5,3,3) is hinting towards further weakness.  On a 
sector-related note, the YLS.X wireless index has begun to 
rollover from its descending trendline.  The index also closed 
below its 50-dma on Wednesday.  With the NASDAQ also looking 
weak, QCOM looks like a good short below today's low of $27.20.

Chart =

Play-of-the-Day (Non-tech BEARISH play)

Citigroup Inc - C - close: 33.15 change: -1.05 stop: 35.66

Company Description:
Citigroup, the preeminent global financial services company with 
some 200 million customer accounts in more than 100 countries, 
provides consumers, corporations, governments and institutions 
with a broad range of financial products and services, including 
consumer banking and credit, corporate and investment banking, 
insurance, securities brokerage, and asset management. (source: 
company press release)

- ORIGINAL WRITE UP: August 23rd, 2002 -
Why We Like It:
Fallout from the WorldCom blowup continues to plague Wall Street. 
New York's Attorney General, who already has former Salomon Smith 
Barney analyst Jack Grubman on the hot set for his cozy 
relationship with the beleaguered telecom company, is now said to 
be targeting Citigroup CEO Sandy Weill. The Wall Street Journal 
reported on Friday that in an effort to become one of the lead 
underwriters of the AT&T Wireless IPO, Weill urged Grubman to 
reevaluate his rating on AT&T. This isn't what investors want to 
hear. Investigations targeting Martha Stewart are one 
thing...Charges of unethical (or illegal) conduct by the head of 
an international bank is another! Fellow banking giant JPM 
doesn't seem to be faring much better. On Thursday, Moody's 
placed their credit rating under review for a possible downgrade. 
Overall it seems there just aren't many reasons to buy financial 
stocks. The recent news merely adds to the apprehension that 
investors have about what other skeletons might be hiding in the 
closet. Combine those worries with a teetering Latin American 
economy, and you've got a very uncertain picture...And boy, does 
Wall Street hate uncertainty! 

Technically, it looks like C is poised to head lower. The stock 
rallied sharply from its July low of $24.48, aided by the IMF's 
bailout of Brazil and a powerful rebound in the Dow Jones. The 
past week, however, has seen shares unsuccessfully attempt to 
move over the 50-dma ($35.64). We believe the subsequent rollover 
has offered an attractive entry point to go short. Our bearish 
aspirations are bolstered by the MACD (which is curling lower 
from the baseline) and downtrending daily stochastics. Point-and-
figure chartists will also note that C remains under bearish 
resistance at $37. By entering this hypothetical short trade on a 
move under $33.50, we're aiming to capture a breakdown to the 
$30.00 region. Bulls will point out that possible support lies in 
the $32.70-$33.00 range. In light of the recent negative news and 
weak technical picture, we don't expect more than a small bounce 
from this area. If the stock does rally, our upside risk will be 
limited by a stop at $35.66, just above the descending 50-dma. A 
more conservative strategy could utilize a stop slightly above 
psychological resistance at $35.00.

- Most Recent Update: August 27th, 2002 -

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.

- Play-of-the-Day Comments: August 28th, 2002 -

In the "too little, too late" department, Citigroup announced 
tonight that it's considering changes in its IPO allocation 
procedures.  The revelations of preferential treatment for 
WorldCom executives have proven to be a public relations 
disaster, as investors are bombarded with daily congressional 
hearings and the video footage of a defensive Jack Grubman being 
chased by an inquisitive reporter.  With the Dow Jones suffering 
a triple-digit decline today, shares of C didn't have a prayer.  
The stock declined by 3% and is now in danger of falling below 
the $32.75 support level, which is most readily visible on a 60-
minute chart.  A break below this area (specifically, the 
relative low of $32.69) could set the stage for a test of 
psychological support at $30.00.  Our stop for this play remains 
set at $35.66. 

Picked on August 26th at $33.49
Results since picked:     +0.34
Earnings Date          07/17/02 (confirmed)
Chart =

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PremierInvestor.net Newsletter                Wednesday 08-28-2002
                                                   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 Tech Stocks
  Stop Adjustments:      MXIM, QLGC (Bullish)
  Closed Long:           MIL 
Active Trader Non-Tech Stocks
  Triggered Plays:       CB, COX, RTH (Bearish)
  Closed Long:           SWFT

Split Trader
                         SPX:  2-for-1 split announcement
                         CBNJ: 3-for-2 split confirmation

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 Tech Stocks (NB) section

NB Play Updates

Stop Adjustments 

Maxim Int. - MXIM - close: 31.56 change: -2.32 stop: 35.06 *new*

Shares of MXIM were hammered for a 6.8% loss on Wednesday.  The 
stock was pressured by a sharp decline in the SOX.X, which still 
seems to be suffering from Tuesday's negative INTC comments.  In 
light of today's action, we're going to lower our stop to $35.06.  
This should protect a small gain from our original entry point.  
A rollover from today's high ($33.00) may offer an opportunity to 
add short positions.  Keep in mind that we'll close this play if 
MXIM trades at or below our profit-target at $30.10.

Chart =


QLogic Corp - QLGC - close: 34.68 change: -1.23 stop: 37.91 *new*

With QLGC falling by another 3.4% today, we feel it's prudent to 
tighten our stop-loss.  Our new stop is set at $37.91, slightly 
above yesterday's high.  More aggressive traders could force QLGC 
to trade above the 50-dma at $38.44.  The fact that shares closed 
below psychological support at $35.00 on Wednesday bodes well for 
the bears.  New short entries can be gauged on a move below 
today's low at $34.14.  Our profit-target is located at $30.51.

Chart =

NB Closed PLay

Closed Long Play

Millipore Corp - MIL - cls: 36.01 chg: -0.84 stop: 36.45

With the overall tech sector looking weak, biotech bulls received 
a ray of hope this morning after the European Commission approved 
Amgen's anemia and neutropenia treatments.  AMGN did initially 
trade higher on this news, but the BTK.X biotech index traded in 
a lackluster fashion for most of the day.  Shares of MIL saw 
weakness shortly after the opening bell and quickly eclipsed our 
stop at $36.45.  Our long play was closed for a loss of 57 cents, 
or 1.5%.  That's just fine with us.  We had added this play based 
on MIL's recent uptrend.  By keeping a tight stop-loss, we were 
able to exit the hypothetical trade as soon as the bears began to 
assert themselves.  Judging by the declining MACD and daily 
stochastic oscillators, a near-term retest of the $35.00 level 
appears likely.

Picked on August 9th at  $37.02 
Results since picked:     -0.57
Earnings Date          07/16/02 (confirmed)
Chart =

Active Trader/Non-tech Stocks (AT) section

AT Play Updates

Triggered Plays 

Chubb Corp - CB - close: 61.75 change: -1.25 stop: 65.01

Shares of CB followed the IUX.X insurance index lower on Monday 
and posted a loss of 1.9%.  Our short play was activated when the 
stock reached the $62.49 mark in morning trading.  Traders can 
target new entries on a move under today's low ($61.21), but keep 
in mind that the $60.00 level may provide some measure of 
support.  Our stop is located at $65.01.

Chart =


Cox Communications - COX - close: 24.96 change: +0.24 stop: 27.02

The requisite condition for activating this short play - a trade 
at $24.64 - was met early Wednesday morning.  COX saw its worst 
levels of the day shortly after the opening bell and finished the 
session with a small gain.  Although shares were relatively 
strong versus the broader market, the bulls could not muster a 
close above psychological resistance at $25.00.  If COX reverses 
course on Thursday, a move under $24.00 would open the door for a 
test of the $22.00 region.  In the event that the stock manages 
to buck the recent downtrend, our upside risk is limited with a 
stop at $27.02.  There was no substantial news in the cable 
sector today.

Chart =


Retail HOLDRS - RTH - close: 80.30 change: -0.70 stop: 83.56

The RLX.X retail index saw further selling on Wednesday, with 
TGT, LOW, and HD all posting losses.  The RTH suffered a 0.86% 
decline and closed well below the 50-dma at $81.00.  This short 
play was activated when RTH reached our entry trigger at $80.70.  
Shares moved under psychological support at $80.00 on an intraday 
basis, hinting towards continued weakness during tomorrow's 
session.  A move under today's low ($79.86) might provide an 
action point to enter new bearish positions.  Our stop-loss is 
set at $83.56.
Chart =

AT Closed Play

Closed Long Play

Swift Trans. - SWFT - cls: 17.38 chg: -0.47 stop: 17.54 

In a rare move, we gave SWFT additional breathing room last night 
by lowering our stop ten cents.  This is because we were willing 
to harbor slightly more risk in order to force SWFT to trade 
below the near-term support region near $17.60.  However, with 
the Dow Transports (TRAN) declining by nearly 3% on Wednesday, 
SWFT was unable to maintain support.   This play was closed for a 
hypothetical loss of 2.6% when our stop was violated during the 
first half-hour of trading.  Shares followed the TRAN lower and 
finished with in the red by 2.6%.  Given the recent rollover from 
the 50-dma and negative oscillators, the transports appear to be 
headed for lower levels.  In addition to weakness in the broader 
market, the group may be feeling the effects of a long-term 
uptrend in crude oil futures (cl02v).  SWFT will have a tough 
time rebounding if the sector action remains bearish.

Picked on August 19th at $18.01
Results since picked:     -0.47
Earnings Date          07/25/02 (confirmed)

Chart =

Split Trader (ST) section

Split Announcements

After a 19-year drought, SPX announces a 2-for-1 stock split

After the marked closed today, SPX Corp. (NYSE: SPW) announced 
that its board of directors had approved a 2-for-1 stock split.

The split will take the form of a stock dividend and will be 
distributed on October 24, 2002 to shareholders of record on 
October 1, 2002.  Post-split trading will commence on October 25, 

It's been quite awhile since SPX had a stock split.  The most 
recent offering came in 1983, when the Dow Jones was trading under 
2,000 and Ronald Reagan was in his first term.  Today's 
announcement follows a powerful multi-year uptrend that has seen 
shares nearly triple in just four years.  Year-to-date, however, 
the stock has lost more than 19%.

The stock closed at $110.25 on Wednesday.  For a current quote, 
click here:


About the company
SPX Corporation is a global provider of technical products and 
systems, industrial products and services, flow technology and 
service solutions. (source: company press release)


Community Bancorp of New Jersey Offers 3-for-2 Stock Split.

At 4:00 PM EST today, Community Bancorp of New Jersey announced 
that its board of directors declared a three for two stock split.  

The split will be issued to shareholders of record on September 
10th, 2002.  The payment date for the stock dividend is also 
September 10th, 2002.  The announcement comes in lieu of an "out 
standing year" and is intended to increase marketability and 
liquidity of the company's common stock.  

CBNJ most recently declared a stock split of 5% in April.  Today's 
announcement follows a longer-term up trend that has seen shares 
rise from $10 to $19.00 in four years.  Year-to-date, CBNJ has 
gained 1.8%.

The stock closed at $19.49 on Friday.  For a current quote, click 


About the company
Community Bank of New Jersey is a $280 million-asset state charted 
community bank established in 1997, which operates from its 
corporate headquarters at 3535 Highway Nine, Freehold Township, 
New Jersey 07728, and six branch locations in Colts Neck, Howell, 
Freehold Borough, Freehold Township, Manalapan, Matawan, and 
Shrewsbury. (source: company press release)

  Trading Ideas

This section contains stocks that meet criteria which may make
them of interest to long and short side traders.  These are not
recommendations, nor have they been reviewed by PremierInvestor
editors for investment potential.  However, each of them has
technical and fundamental characteristics that make them worthy
of further review by traders and investors looking for fresh 
ideas.  New stocks will appear daily following the market close.

Value Plays With Bullish Signals 
Ticker  Company Name               Close     Change


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

NWRE    Neoware Systems Inc.      18.72      +2.03

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

ITMN    Intermune Inc.             22.66      +4.66
EASI    Engineered Support Systems 52.40      +1.91
COCO    Corinthian Colleges Inc.   34.20      +2.18

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

GLYT    Genlyte Group Inc.         37.16      -2.95
MGAM    Multimedia Games Inc.      21.76      -2.43
ATVI    Activision Inc.            26.69      -2.05
TARO    Taro Pharmaceuticals       28.65      -1.26
RGA     Reinsurance Group of Amer. 28.56      -1.04
VIP     Vimpel Communication Ads   23.23      -1.72

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

MERQ    Mercury Interactive        24.51      -1.43
LLL     L-3 Communications         47.17      -0.63
NLS     Nautilus Group Inc.        30.60      -1.89
AA      Alcoa Inc.                 25.07      -1.63
BARZ    Barra Inc.                 35.15      -1.10
CCL     Carnival Corporation       25.00      -0.90
BRL     Barr Laboratories Inc.     67.00      -2.48

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