Option Investor
Newsletter

Daily Newsletter, Thursday, 09/05/2002

HAVING TROUBLE PRINTING?
Printer friendly version
PremierInvestor.net Newsletter                 Thursday 09-05-2002
                                                    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:      Not That Bad
Play-of-the-Day:  Already Priced In?
Market Sentiment: No Fundamental Difference


************************************************************
MARKET WRAP  (view in courier font for table alignment)
************************************************************
      09-05-2002           High     Low     Volume Advance/Decline
DJIA     8283.70 -141.40  8420.20  8217.05 1.53 bln   1089/2066
NASDAQ   1251.01 - 41.30  1274.76  1251.01 1.46 bln    981/2362
S&P 100   439.14 -  8.84   447.98   435.65   Totals   2070/4428
S&P 500   879.15 - 14.25   893.40   870.50 
RUS 2000  381.06 -  8.69   389.75   380.91 
DJ TRANS 2204.26 -111.00  2314.26  2186.18   
VIX        42.23 +  2.29    44.87    41.79   
VXN        60.72 +  3.30    61.72    59.59 
Total Vol   3,205M
Total UpVol   663M
Total DnVol 2,511M
52wk Highs   110
52wk Lows    282
TRIN        1.41
PUT/CALL    0.89
*************************************************************

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

Not That Bad

Despite the drops in retail sales, a falling ISM number and 
lower Productivity numbers the headline everyone waited from
came from Intel. The initial consensus was not that bad after
hearing they would lower numbers to only the midpoint of their
initial guidance. Now the question is why did they not bounce
higher after the announcement?

Dow Chart


Nasdaq Chart


The day started off with more negative news from the retailers.
Wal-Mart missed same store sales estimates again with only a 
+3.8% increase but other stores faired much worse. GDYS -8%, FTUS
-10.8%. Remember this is for the last week of back to school
sales and numbers were dropping in many cases instead of rising. 
The Chain Store Sales report showed August sales only grew +1.6%
and was the weakest number since last September. It appears the
zero interest car loans are continuing to close wallets for 
general retail goods. Retailers missing estimates include WMT,
GDYS, FTUS, JWN, AEOS, ROST, DG, KSS, TGT, FD, SKS. Even the 
discount stores posted losses which disturbed analysts who 
thought they would continue to thrive.

Other economic reports included Factory Orders, which surged
in July to 4.7% and offset a revised -2.5% drop in June. The
conflicting signals did not provide investors with confidence
that things have changed but that the low level of activity
made reporting very erratic. The majority of the gains were in
aircraft orders (+8.76%) and when that number is removed results
showed a much weaker +1.8% number. Obviously +1.8% for the 
broader manufacturing sector is very anemic. 

The Productivity numbers surprised to the upside at +1.5% but
it is due to manufacturers maintaining current production levels
with fewer employees. Continued cost cutting (layoffs) raises
productivity levels. However, unit labor costs rose +3.1%. 
New jobless claims came in +8,000 higher than expected at 403,000
and the second week over 400,000. The four-week moving average
also rose over 400,000 which was troubling for the broader trend. 
The initial claims from last week at 403,000 were revised upward
to 411,000. It appears that the downward trend in July has failed
and unemployment is accelerating upward. We will get the real 
story on Friday morning with the Non-Farm Payrolls which are
expected to increase by 30,000. I strongly doubt this but we 
will know at 8:35 in the morning. 

The big report of the day was the ISM non-mfg and it came in at
50.9 and well below consensus of 54.0. This was the third monthly
drop in a row. (60.1, 57.2, 53,1, 50.9) Anything below 50 represents
a contraction. The services section has normally been exempt from
severe recession drops but even that sector is suffering now. The
low for the year was 49.6 back in January and I would bet we see
another 49 number next month. This was the lowest number since 
January. New orders fell to 51.6% and inventories fell to 46.0%.
This indicates businesses are trying to lower inventory to offset
slowing sales. Exports fell -13.5% to 46.0% indicating that global
demand is also slowing. Getting the picture? The unemployment
numbers for Germany were released today showing a 9.9% unemployment
rate. This would confirm the global trend.

In the tech arena HPQ announced yesterday that the back to school
season was much weaker than expected at only 60% of the expected
increase. This appears to be the pattern across the board. TLAB 
warned today that this was the worst downturn they had ever 
experienced and said Q3 sales would be -15% to -25% less than prior
estimates. After the bell Motorola affirmed estimates and said 
they were making advances in cost cutting and were targeting 
93,000 employees in mid-2003 down from 150,000 in 2000. The CEO 
said the 3Q and 4Q estimates were in range. Banc America also
reiterated their estimates for the SOX to drop to 200. They said
chip earnings estimates were still 15% to 25% too high. 

On the Intel conference call they said sales were down across 
the board including the consumer products. They refused to answer 
any questions on servers individually. They avoided any detail 
about business demand. This would be negative to me. If business
demand was increasing they would want to brag about it. Intel said 
they were going to guide down to the lower mid point of their 
previous estimates. They refused to give guidance about the 4Q 
but said full year estimates were in still in the range of their
previous guidance. They also refused to give processor mix 
guidance. It was a very subdued call with questions being 
dodged constantly. 

When pressed by Dan Niles they said any 4Q seasonal bounce was 
not a sure bet meaning they were seeing weakness in 4Q orders. 
Also, they said their inventory levels were rising (sales slowing)
and that we should not expect any big sell into the pipeline 
for seasonal trends. They said their channel vendors were not
interested in ordering any more product than they could sell 
in a weakening environment. They were asked about pricing since 
they just cut prices drastically and they said the price cuts 
helped some but that pricing remains very aggressive. This 
means the channel will only order for inventory if they can 
steal it and that AMD is cutting their throat trying to hold 
market share. This is going to cause margins to drop and their 
new estimate is in the 51% range. AMD has already warned that 
it is only seeing a modest increase in demand for the 3Q. In my 
opinion it was very contentious with Intel avoiding any hardball
questions and any references to guidance past this quarter. The 
stock had run up slightly after the first announcement but then 
moved back to $15.50 in the middle of the call. Buy the end it 
spiked back up to 15.78 after a couple positive responses. 
Futures traded on both sides of zero during the call but were 
positive when the call ended. 

The impact to our markets tomorrow should be positive. The QQQs
were up +16 cents in after hours and Intel finished up about
+75 cents from the closing numbers. Most of the tech related 
stocks like BRCM, PMCS, CSCO, MSFT, DELL all saw decent increases
after the call with MSFT up over $1.00. If our future was left
up to Intel tomorrow we would probably see a positive bounce.
Dow component Phillip Morris was also up in after hours. 
However the bigger impact on the market will be the Non-Farm
Payroll report. If we get a negative jobs number tomorrow then
all bets are off. A negative number will telegraph even more 
weakness to the double dip crowd and bring back that recession
fear. A positive number, even if below estimates, should be 
ignored on the better than expected Intel news. 

If we get a decent jobs number I would expect a relief rally 
that could carry over into next week. The Intel bad news has 
been priced into the market and those waiting on the sidelines
will start moving back in. I have been expecting a post 9/11 
rally next week beginning with bargain hunting on Monday. This 
could jump start that rally. I will be giving serious thought
to going long on Friday instead of Monday depending on the 
market reaction to the jobs report. 

Enter Very Passively, Exit Very Aggressively!

Jim Brown


===============
Play-of-the-Day   (New BULLISH high-risk/high-reward play)
===============

Semiconductor HOLDRS - SMH - cls: 22.28 chg: -0.96 stop: *text*

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


Why We Like It:
All eyes were on Intel tonight.  Speculation that the company's 
mid-quarter update would contain a downside surprise had 
investors bailing out of chip stocks in droves over the past 
week.  Their fears seemed to be justified when INTC said that Q3 
revenue would fall under the midpoint of their initial guidance.  
The conference call didn't contain any disastrous revelations, 
but executives did say that that sales were lower across the 
board and inventory levels were rising.  Sounds awfully weak!  
Despite this fundamental negativity, INTC finished the after-
hours session with a 5% gain.  What gives?

We believe tonight's downward revision had already been priced 
into the stock.  Analysts have been smothering INTC with 
downgrades and slashed expectations en masse.  The additional 
negative comments in the conference call were hinted at last 
week, when CEO Craig Barrett described the outlook for IT 
spending as "very hazy."  INTC has been whacked for a loss of 
more than 20% in just two weeks, which in turn dragged the 
semiconductor index (SOX.X) to multi-year lows.  It looks like 
Wall Street was expecting the worst.  While tonight's update was 
negative, it certainly didn't provide any shockers.  The fact 
that INTC was higher in after-hours (along with most tech stocks) 
is an indication that the bears may have over-played their hand.  
INTC, the SOX.X, and the SMH are all technically oversold, which 
provides a favorable climate for a short-covering rally. 

No doubt about it, this is a speculative play.  We're definitely 
fighting the trend, and this is an attempt to call a short-term 
bottom in the semiconductor group.  Under normal circumstances 
we'd probably place an entry trigger just above today's high.  
However, the after-hours action indicates that the SMH will gap 
higher tomorrow.  We'll seek additional bullish confirmation by 
waiting to enter this play until shares move above $23.05.  If 
this is the case we'll attempt to minimize downside risk with a 
stop at $21.98, just under today's low.  A short-covering rally 
could see the SMH quickly retrace its recent decline as panicked 
bears rush to cover their positions.  We'll initially target a 
move to the $27.00 region, just under the 50-dma.  Shorter-term 
term traders could target a rally to psychological resistance at 
$25.00.  Note, however, that we will not enter this play if the 
SMH opens above $23.50.

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




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

No Fundamental Difference

By Steven Price

So much for Wednesday's bounce.  The bears came back out of 
hibernation today and erased yesterday's gain and left the Dow 
down 25 points from Tuesday's close.  While yesterday's 117-point 
gain looked attractive to those investors picking a bottom, it 
turned out to be just a "dead cat bounce" after Tuesday's drop of 
over 350 points.  After the Dow, S&P 500 and Nasdaq all ruined a 
nice pattern of higher highs and higher lows by taking out the 
lows of August 14, the red flags went up and any rally looks 
suspect until we see a new higher high.

A look at the bullish percentages is revealing in the trend 
reversal.  We have seen a steady increase from oversold levels 
under 30% up to percent levels in the high 50s.  This indicates 
the number of stocks in an index that are currently giving point 
and figure buy signals.  The NDX, which usually leads the other 
indices, has reversed from a high of 60% earlier this month, to 
today's reading of 37%.  This shows almost half of the stocks 
that were giving buy signals just a couple of weeks ago, no 
longer doing so.  This trend in the NDX actually reversed several 
days ago, and was followed today by reversals down in the S&P 500 
and the Dow.  While the Dow and S&P remain just over 50%, today's 
point and figure reversal was significant in that it reversed the 
trend of adding stocks with buy signals and instead subtracted 
from the total.  The OEX has reversed down as well, and finished 
the day at only 46%.  This index broke the 50% mark on Monday.

Today's jobs data showed the four week moving average for initial 
jobless claims climbing by 5,250 to 400,000.  The moving average 
is up 19,500 over the past four weeks, indicating a rising number 
of layoffs.  The ISM non-manufacturing index also fell from 53.1% 
in July to 50.9% in August.  While anything over 50% indicates 
growth, this drop showed growth slowing considerably and was far 
below expectations of 54.4%.

One of the main reasons for the recent sell-off in the past few 
days was the prediction that Intel would be cutting earnings 
estimates.  The Semiconductor index reached new 52-week intraday 
lows yesterday and again today.  Today's close of 275.36 was also 
a 52-week closing low.  Intel did not disappoint.  They lowered 
guidance and said microprocessor unit sales, the largest part of 
its business, are coming in at the lower end of their normal 
seasonal pattern for the quarter.  They also dropped the top end 
of their revenue target from $6.9 billion to $6.7 billion, 
leaving the bottom end unchanged at $6.3 billion.  While they 
stayed away from targeting net income, the news they did release 
was better than expectations.  The stock got a boost after hours, 
trading up to $15.82 after a close of  $15.11.  This could 
provide the impetus for another market bounce tomorrow, as it 
will certainly give the semiconductors something to rally on.  
While this was still a lowering of guidance, it could have been 
much worse. 

Look for a rally in the tech sector tomorrow after the Intel 
news.  The wrench in this prediction, however, is the August 
unemployment rate data due out tomorrow morning.  If this data 
follows in the footsteps of this morning's weekly numbers, we 
could see a continued sell-off.  We will most likely see some 
extreme volatility leading up to next Wednesday's Sept 11 
anniversary and then somewhat of a rally afterwards, as long as 
there are no attacks.  However, after poor retail sales numbers 
today confirmed that consumers are spending less, the 
fundamentals appear to have not changed much.  Until we see some 
positive signs of spending in the economy, we will most likely be 
heading south in the near future.


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

Market Averages

DJIA ($INDU)

52-week High: 10679
52-week Low :  7702
Current     :  8283

Moving Averages:
(Simple)

 10-dma: 8671
 50-dma: 8665
200-dma: 9678

S&P 500 ($SPX)

52-week High: 1226
52-week Low :  797
Current     :  879

Moving Averages:
(Simple)

 10-dma:  918
 50-dma:  911
200-dma: 1061

Nasdaq-100 ($NDX)

52-week High: 1782
52-week Low :  892
Current     :  882

Moving Averages:
(Simple)

 10-dma:  960
 50-dma:  969
200-dma: 1309


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


The Semiconductor Index (SOX.X): The SOX set a new 52-week low 
today after setting a new intraday low on Wednesday.  The sell-
off was a result of predictions that Intel would lower their 
estimates after the bell.  Intel lowered its revenue guidance, 
but not as much as expected.  It also said nothing about profits.  
This semi-positive development could spark a bounce on tomorrow's 
open, but the floor has once again been lowered for the group.  
Banc of America said today that it expects the semis to cut 
current 2003 estimates by an additional 15-25% and predicts a 
bottom of 200 for the SOX.  It also said chip company valuations 
should reach the levels of the early 90s.

52-week High: 657
52-week Low : 275
Current     : 275

Moving Averages:
(Simple)

 10-dma: 316
 50-dma: 341
200-dma: 487


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

Market Volatility
9/11 here we come. Volatility is back over 40 as yesterday's 
bulls went into hibernation.  The "dead cat bounce" ended below 
where it started and landed the Dow 25 points below Tuesday's 
close.  Guess that 350-point drop was for real.  The only 
salvation may be Intel lowering guidance less than expected after 
the close today.  While this isn't terribly positive, it may be 
enough to spark a bounce on Friday.  Unless that bounce is over 
300 points, look for the VIX to fall no lower than the high 30s 
ahead of next week's solemn anniversary.  

CBOE Market Volatility Index (VIX) = 42.23 +2.29
Nasdaq-100 Volatility Index  (VXN) = 60.72 +3.30

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

          Put/Call Ratio  Call Volume   Put Volume

Total          0.89        468,422       418,229
Equity Only    0.69        346,198       240,272
OEX            0.60         25,257        15,141
QQQ            0.26         49,359        12,784

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

Bullish Percent Data

           Current   Change   Status
NYSE          42      - 2     Bull Confirmed
NASDAQ-100    37      - 5     Bull Correction
DOW           53      - 4     Bull Correction
S&P 500       52      - 2     Bear Confirmed
S&P 100       46      - 3     Bear Confirmed

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

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

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

 5-Day Arms Index  1.61
10-Day Arms Index  1.63
21-Day Arms Index  1.30
55-Day Arms Index  1.37

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        853          1879
NASDAQ      920          2281

        New Highs      New Lows
NYSE         38              50
NASDAQ       15             123

        Volume (in millions)
NYSE     1,524
NASDAQ   1,508

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

Commitments Of Traders Report: 08/27/02

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 added 3,000 contracts to their long positions, while 
small traders reduced longs by almost 4,000.  Small traders also 
added a similar amount to the short side.


Commercials   Long      Short      Net     % Of OI 
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%)
08/27/02      425,982   469,087   (43,105)   (4.8%)

Most bearish reading of the year: (111,956) -   3/6/02
Most bullish reading of the year: ( 36,481) - 10/16/01

Small Traders Long      Short      Net     % of OI
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%
08/27/02      153,152    72,408    80,744     35.8%

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 increased their long contracts by 3,500 contracts, 
and added only 1,200 to the short side.  Small traders, on the 
other hand, reduced long contracts by 1,200, while leaving shorts 
relatively unchanged.


Commercials   Long      Short      Net     % of OI 
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%)
08/27/02       45,354     50,634    (5,280) ( 5.5%)

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
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%
08/27/02       10,156     8,040     2,116    11.6%

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 their shorts by 1,000 contracts, while 
leaving long positions approximately the same.  Small traders 
increased both positions slightly. 


Commercials   Long      Short      Net     % of OI
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%
08/27/02       21,023    14,328    6,695      18.9%

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
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%)
08/27/02        6,825     8,438    (1,613)   (10.6%)

Most bearish reading of the year:  (8,777) - 10/12/01
Most bullish reading of the year:   1,909  -  1/16/01

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




=================================================================
To stop receiving this PremierInvestor.net Newsletter,
send email to Contact Support
=================================================================
DISCLAIMER
=================================================================

This newsletter is a publication dedicated to the education
of stock traders. The newsletter is an information service
only. The information provided herein is not to be construed
as an offer to buy or sell securities of any kind. The
newsletter picks are not to be considered a recommendation
of any stock but an information resource to aid the investor
in making an informed decision regarding trading in stocks. It
is possible at this or some subsequent date, the editors and
staff of PremierInvestor.net may own, buy or sell securities
presented. All investors should consult a qualified professional
before trading in any security. The information provided has
been obtained from sources deemed reliable but is not
guaranteed as to accuracy or completeness. PremierInvestor.net
staff makes every effort to provide timely information to its
subscribers but cannot guarantee specific delivery times due to
factors beyond our control.

Please read our disclaimer at:
http://www.optioninvestor.com/page/oin/aboutus/disclaimer.html

*****************************************************************
ADVERTISING INFORMATION

For more information on advertising in PremierInvestor.net
Newsletter, or any Premier Investor Network newsletter please
contact Contact Support.

*****************************************************************


Copyright  2002  PremierInvestor.net. and
The Premier Investor Network.
Do not duplicate or redistribute in any form.




PremierInvestor.net Newsletter                 Thursday 09-05-2002
                                                    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
  Bearish Play Updates:  QLGC, SBC

Stock Bottom / Active Trader
  New Bullish Plays:     AGY
  New Bearish Plays:     BSC
  Bullish Play Updates;  CLX
  Bearish Play Updates:  C, CB, COX, PSS, RKY, RTH
  Closed Bearish Plays:  CTX

High Risk/Reward
  New Bullish Plays:     SMH
  Bearish Play Updates:  IDPH

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

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

Qlogic - QLGC - cls: 32.41 chg: -1.39 stop: 34.21 *new*

The chip group sold off today, ahead of tonight's mid-quarter 
update from INTC.  The SOX.X tagged a multi-year low of 274 and 
finished with a loss of 5.1%.  QLGC followed the index lower and 
posted a 4.1% loss.  Shares traded an Inside Day, reflecting 
investor indecisiveness ahead of tonight's news.  Speaking of 
which, the leading semiconductor company reported that Q3 revenue 
will fall slightly under the middle range of its previous 
guidance.  This did not come as a surprise.  Intel's CEO had 
recently hinted that this would be the case, and analysts had 
widely expected a downward revision.  With the conference call 
not revealing any more negative surprises, after-hours traders 
bid INTC higher by roughly 60 cents.  QLGC also moved higher, and 
at last check was trading near $33.10.

What we could be faced with now is a short-covering rally in the 
chip sector.  Judging by the group's recent sell-off, the market 
may have been expecting a more negative update from INTC.  The 
SOX.X is deeply oversold (as shown by the daily stochastics) and 
could be overdue for a rebound.  With this in mind, we're going 
to tighten our stop for this play to $34.21, slightly above 
yesterday's high.  This should protect a move of +9.6% from our 
entry point.  Those looking to harvest a larger gain may want to 
use a stop just above today's high at $33.40.

Picked on August 23rd at $37.85 
Results since picked:     +5.44
Earnings Date          07/18/02 (confirmed)




---

SBC Comm. - SBC - cls: 23.47 chg: -0.83 stop: 25.06 

Leading the Dow Jones to a triple digit gain on Wednesday was 
SBC.  The stock didn't rally on any specific news, but some bears 
may have been eager to take profits after the recent sell-off.  
Today's action was more encouraging for our short play, as shares 
failed to move above short-term resistance at $24.50 and pulled 
back by 3.4%.  In terms of sector strength, the IXTCX combined 
telecom index has slipped below the 50-dma and may soon be making 
its way towards the 85-90 region.  Our stop remains set at 
$25.06.  Short-term traders could target new entries on another 
rollover from $24.50, but remember that we'll close this play if 
SBC trades at or below $22.26.

Picked on August 21st at $27.49 
Results since picked:     +4.02
Earnings Date          07/23/02 (confirmed)

 



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

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

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

Argosy Gaming Co. - AGY - cls: 28.05 chg: +0.55 stop: *text*

Company Description:
Argosy is a leading multi-jurisdictional owner and operator of 
riverboat casinos and related entertainment and hotel facilities 
in the midwestern and southern United States. Argosy owns and 
operates the Alton Belle Casino in Alton, Illinois, serving the 
St. Louis metropolitan market; the Argosy Casino in Riverside, 
Missouri, serving the greater Kansas City metropolitan market; 
the Argosy Casino-Baton Rouge in Louisiana; the Belle of Sioux 
City in Iowa; the Argosy Casino & Hotel in Lawrenceburg, Indiana, 
serving the Cincinnati and Dayton metropolitan markets; and the 
Empress Casino and Hotel in Joliet, Illinois serving the greater 
Chicagoland market. (source: company press release)

Why We Like It:
If there was a stock in this declining market that has good news, 
this could be it.  In July, the company had earnings and recorded 
record second quarter revenues of $235.2 million, a $68.7 million 
increase over the second quarter of 2001.  Then, the next day, 
the company was upgraded by Bear Stearns from "attractive" to 
"buy".  Today, Credit Lyonnais Securities initiated coverage on 
Arogsy Gaming with an "add" rating.  

Beyond good news, AGY has showed terrific relative strength over 
the last two days, as the stock has rebounded off the 50-dma.  
The stock held support in the $26.75 area and has managed to 
ascend while the broader market has slid under pressure from 
bears.  The daily Stochastics have held the lower line, and look 
as if they could be turning back up. The stock could see overhead 
resistance in the $30.00 range, though if AGY is able to break 
through, it could retest the 200-dma at 32.45.    

Our plan for AGY is short and sweet: we will add AGY to our non-
tech long list if the stock breaks today's high.  Thus, our 
trigger for AGY is at $28.06, with an initial profit target at 
32.35, just 10 cents below the 200-dma.  Once activated, our stop 
will be just below the 50-dma at 26.74.   

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



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



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

Bear, Stearns & Co. - BSC  - cls: 60.15 chg: -1.68 stop: *text*

Company Description:
Founded in 1923, Bear, Stearns & Co. Inc. is a leading worldwide 
investment banking and securities trading and brokerage firm, and 
the major subsidiary of The Bear Stearns Companies Inc. With 
approximately $31.0 billion in total capital, Bear Stearns serves 
governments, corporations, institutions and individuals 
worldwide. The company's business includes corporate finance and 
mergers and acquisitions, institutional equities and fixed income 
sales, trading and research, private client services, 
derivatives, foreign exchange and futures sales and trading, 
asset management and custody services. Through Bear, Stearns 
Securities Corp., it offers prime broker and broker dealer 
services, including securities lending. Headquartered in New York 
City, the company has approximately 10,500 employees worldwide.
(source: company press release)

Why We Like It:
Reuters reported today "Wall Street bankers should have just 
stayed at the beach this summer".  Apparently the fixed income 
underwriting market has been more sluggish than usual, and caused 
for a very lethargic third quarter.  Further, there were only 24 
IPO's in the last quarter, gathering only half of the capital 
that was raised one year ago.  M&A volume fell 34 percent to 
151.7 billion, a far cry from the 676.3 billion in 1999.  In 
addition, bond and convertible securities fell 70 percent in July 
and August compared to the first half of the year.  Although Bear 
Sterns has benefited more than other companies from what little 
bond underwriting there is, the company still has to deal with 
the broader slowdown of the finance market.  

The daily chart might have sellers encouraged, as today's close 
was beneath the 50-dma, and the 200-dma.  The stock recently 
rallied to hit a near term high of $67.55 in early August, but 
has since fallen to current levels.  BSC is now beneath near-term 
shelf resistance in the $62.00 region, and could see technical 
bears begin to eye this equity.  The daily MACD has recently 
topped out and turned negative while heading towards the 0 line.  
Also, the daily Stochastics have entered the oversold region and 
look as if they could travel lower.  The weekly chart displays 
the stock just above the 50-Week MA, and also depicts the weekly 
Stochastics having recently fallen out of the overbought region. 

In light of potential weakness in the brokerage sector, the 
newsletter will consider BSC as a short if the stock falls below 
today's low of $59.65.  Thus, our trigger for the play would be 
at $59.64, with an initial profit target just above the 200-Week 
MA at $51.10.  Conservative investors could shoot for a closer 
profit target at $56.00.  If triggered, our stop will initially 
be just above yesterdays high at $62.01.           

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



Picked on September xxth at $xx.xx <--- See chart 
Results since picked:        +0.00
Earnings Date             06/19/02 (confirmed)
 




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

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

Clorox Corp. - CLX - close: 42.82 change: +0.35 stop: *text*

CLX has yet to reach our entry trigger at $43.49, but it's 
getting pretty darn close!  Shares have remained relatively 
strong versus the broader market, as evidenced by today's 35-cent 
gain while the Dow Jones sank by 141 points.  This is an 
indication that a breakout could be just around the bend.  Bulls 
can also be pleased with the strong volume that accompanied the 
past two days of gains.  If the Dow rebounds on Friday we may see 
CLX reach our entry point.  Should this be the case, our stop 
will be set at $41.99.

Picked on September xth at xx.xx <- see text
Results since picked:      +0.00
Earnings Date           08/07/02 (confirmed)




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

Citigroup Inc - C - close: 29.30 change: -1.00 stop: 31.26

Citigroup continues to encourage bears, as the stock made a new 
relative lower low in today's session.  The bad news seems to 
just keep pouring in.  Kaplan Fox has filed a class action 
lawsuit against Citigroup alleging that the company violated 
securities law.  The lawsuit further accuses Citigroup of not 
fully disclosing the company's relationship with Enron.  On the 
daily chart, C looks as if it could be weakening with the daily 
Stochastics having traveled well into the oversold region, and 
the MACD recently making a bearish cross-over.  Near-term support 
lies in the $28.60 area, and could be breached if bulls panic in 
an attempt to not get caught in a potential waterfall.  The 
current stop loss will stay at $31.26, though new positions could 
be considered with a move under $28.59.             

Picked on August 26th at $33.49
Results since picked:     +4.19
Earnings Date          07/17/02 (confirmed)




---

Chubb Corporations - CB - cls: 60.05 chg: -0.59 stop: 63.70

With no fresh news surfacing on Chubb today, the insurance stock 
stumbled in the session to close down -0.59 cents.  Investors 
continue to stay weary of insurance stocks before the September 
11th anniversary.  Further, the Insurance Index (IUX.X) also 
displayed weakness today; the IUX dropped -1.67%.  Bears are 
optimistic that Chubb made a lower low, and find solstice in the 
MACD, which has just crossed lower.  Sellers would like to see CB 
fall below psychological and technical support at $60.00.  In 
order to give this play plenty of room to wiggle, the newsletter 
is not going to move the stop down at this time.             

Picked on August 28th at $62.49
Results since picked:     +2.44
Earnings Date          07/29/02 (confirmed)




---

Cox Comm. - COX - cls: 25.08 chg: -0.07 stop: $26.26

The good news is that the descending trend is not yet broken, the 
bad news is that COX showed decent relative strength compared to 
the broader market today.  Bears are buoyant with the daily 
Stochastics falling out of the overbought region, though the MACD 
attempting to cross above the 0 line is raising some eyebrows.  
Part of the positive move over the last two days may be 
attributed to Cox Communication's announcement that the company 
launched its High Definition Television (HDTV) in Phoenix, AZ.  
Further, Robert Maltbie reported in Forbes magazine that Cox's 
growth assumptions are far to high to support reasonable 
valuation of the company.  Obviously, today's move has us 
concerned with COX, as the company has been elevating over the 
last two days.  However, because the descending trend has not yet 
been breached, we have not given up on this short position.  The 
newsletter will not move down our stop at this time.  New 
positions could be considered with a move under the low three 
days ago at $24.00.  However, because the stop has not been moved 
yet, new positions below $24.00 would be risky.  

Picked on August 28th at $24.64
Results since picked:     -0.44
Earnings Date          07/31/02 (confirmed)




---

Payless Shoesource - PSS - cls: 53.90 chg: +0.70 stp: 54.40

Yesterday, Payless Shoesource reported that August same-store 
sales increased 0.2%.  The market seems to have reacted 
optimistically to the news, as the stock has traded positive in 
the last two sessions.  The move definitely has bears concerned, 
as this stock traded a mere 0.20 cents away from our stop today.  
However, our stop at $54.40 is just above relative resistance and 
could hold if further broader market selling persists.  Bears are 
encouraged by the daily MACD, which has been traveling in the 
upper region, and could need some time to cool off.  We will not 
move our stop at this time.     

Picked on August 26th at $52.99
Results since picked:     -0.91
Earnings Date          08/14/02 (confirmed)




---

Adolph Coors - RKY - cls: 61.03 chg: +1.14 stop: *text*

Our short in Adolph Coors was not triggered in today's trading, 
as the stock never traded below our entry point at $58.24. The 
stock moved above the 200-dma in today's trading, which is a 
fairly bullish event.  However, just in case Coors finds that its 
beer is going flat, we are going to leave the trigger active for 
at least one more day.  If RKY does find more strength in 
tomorrow's trading we will close this setup to avoid getting a 
fluke trigger on a random gap opening.    

Picked on August xxth at $xx.xx <-- See text 
Results since picked:     +0.00
Earnings Date          07/25/02 (confirmed)

---

Retail Hldrs - RTH - close: 78.42 change: -0.88 stop: 81.26

With no new media buzz directly surfacing on the RTH today, the 
trust's weakness may be attributed to broader market weakness and 
lackluster economic numbers today. Jobless Claims decreased to 
403 from 411 during the week of August 31st. Overall, the jobless 
claims numbers are disappointing, and indicate that employers are 
not stepping up hiring efforts at this time.  As a consequence 
consumers could still be timid to begin spending extravagantly on 
goods at this time.  Bears are finding further optimism in the 
daily Stochastics, which are heading towards the oversold region, 
and the MACD having recently crossed below the 0 line.  The 
newsletter will not move the stop at this time.        

Picked on August 26th at $80.70
Results since picked:     +2.28
Earnings Date                NA


 


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

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

Centex Corp. - CTX - cls: 50.08 chg: +0.61 stop: 50.26

On Tuesday we lowered our stop for CTX to $50.26.  Our reasoning 
for using this tight stop was that it would take a serious 
bullish effort to push shares above the 50-dma and psychological 
resistance at $50.00.  The past two sessions, however, have seen 
sentiment in the homebuilding group abruptly shift directions. 
The catalyst for this shift was provided by HOV, who reported 
blowout earnings on Wednesday.  Further bullish fuel was added to 
the fire last night, when LEN also handily beat Q3 estimates.  
This news had CTX moving higher on Thursday morning.  Shares 
quickly violated our stop-loss, and this play was closed for a 
small loss of 0.5%.  Given the rising volume and bullish daily 
stochastics, it would not be surprising to see CTX make its way 
to the $52-$53 region within the next few sessions.  However, the 
DJUSHB home construction index faces overhead resistance in the 
form of its 50-day and 200-day moving averages.  We'd consider 
revisiting a short position in CTX if the stock rolled over from 
its own 200-dma at $53.10 and the fundamental picture for the 
homebuilding group showed signs of worsening.

Picked on September 3rd at $49.99 
Results since picked:       -0.27
Earnings Date            07/17/02 (confirmed)






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

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

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

Semiconductor HOLDRS - SMH - cls: 22.28 chg: -0.96 stop: *text*

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


Why We Like It:
All eyes were on Intel tonight.  Speculation that the company's 
mid-quarter update would contain a downside surprise had 
investors bailing out of chip stocks in droves over the past 
week.  Their fears seemed to be justified when INTC said that Q3 
revenue would fall under the midpoint of their initial guidance.  
The conference call didn't contain any disastrous revelations, 
but executives did say that that sales were lower across the 
board and inventory levels were rising.  Sounds awfully weak!  
Despite this fundamental negativity, INTC finished the after-
hours session with a 5% gain.  What gives?

We believe tonight's downward revision had already been priced 
into the stock.  Analysts have been smothering INTC with 
downgrades and slashed expectations en masse.  The additional 
negative comments in the conference call were hinted at last 
week, when CEO Craig Barrett described the outlook for IT 
spending as "very hazy."  INTC has been whacked for a loss of 
more than 20% in just two weeks, which in turn dragged the 
semiconductor index (SOX.X) to multi-year lows.  It looks like 
Wall Street was expecting the worst.  While tonight's update was 
negative, it certainly didn't provide any shockers.  The fact 
that INTC was higher in after-hours (along with most tech stocks) 
is an indication that the bears may have over-played their hand.  
INTC, the SOX.X, and the SMH are all technically oversold, which 
provides a favorable climate for a short-covering rally. 

No doubt about it, this is a speculative play.  We're definitely 
fighting the trend, and this is an attempt to call a short-term 
bottom in the semiconductor group.  Under normal circumstances 
we'd probably place an entry trigger just above today's high.  
However, the after-hours action indicates that the SMH will gap 
higher tomorrow.  We'll seek additional bullish confirmation by 
waiting to enter this play until shares move above $23.05.  If 
this is the case we'll attempt to minimize downside risk with a 
stop at $21.98, just under today's low.  A short-covering rally 
could see the SMH quickly retrace its recent decline as panicked 
bears rush to cover their positions.  We'll initially target a 
move to the $27.00 region, just under the 50-dma.  Shorter-term 
term traders could target a rally to psychological resistance at 
$25.00.  Note, however, that we will not enter this play if the 
SMH opens above $23.50.

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




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

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

IDEC Pharmaceuticals - IDPH - cls: 39.10 chg: -1.77 stop: 41.80

This short play was triggered on Wednesday morning when IDPH hit 
our entry point of $38.59.  The stock rallied with the NASDAQ in 
afternoon trading but remained safely below our stop at $41.80.  
These gains evaporated today after IDPH announced that its 
Psoriasis drug had not been effective in a recent trial.  Shares 
gapped lower on this news and trended lower for the remainder of 
the session, ultimately finishing with a loss of 4.3%.  This is 
an encouraging development for our short play.  On Friday, we'll 
be watching for IDPH to sink under yesterday's low of $38.48.  
New short entries could be evaluated if this is the case.  On a 
sector-related note, bears can also be pleased with today's 4.5% 
decline in the biotech index.  The BTK.X has violated the 50-dma 
and looks to be headed for a test of the 300 region.

Picked on September 5th at $38.59 
Results since picked:       -0.51
Earnings Date            07/17/02 (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 

STI     Suntrust Banks Inc.        66.95     +0.86
KBH     Kb Home                    48.90     +1.09
TTC     Toro Co.                   56.61     +0.54

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

NONE     

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

COO     Cooper Companies Inc.      50.25     +6.25
TTWO    Take-Two Interactive       27.34     +2.06
EASI    Engineered Support Sys.    56.36     +1.36
BBY     Best Buy Co.               22.00     +1.60
CL      Colgate-Palmolive          56.14     +1.63

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

CI      Cigna Corporation          78.65     -1.35
FISV    Fiserv Inc.                33.05     -2.40
CSX     Csx Corp.                  29.03     -5.60
ANF     Abercrombie & Fitch        21.86     -1.91
HP      Helmerich & Payne Inc.     32.94     -1.55

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

SRE     Sempra Energy              22.41     -0.98
ESBK    Elmira Savings             25.20     -0.05




=================================================================
To stop receiving this PremierInvestor.net Newsletter,
send email to Contact Support
=================================================================
DISCLAIMER
=================================================================

This newsletter is a publication dedicated to the education
of stock traders. The newsletter is an information service
only. The information provided herein is not to be construed
as an offer to buy or sell securities of any kind. The
newsletter picks are not to be considered a recommendation
of any stock but an information resource to aid the investor
in making an informed decision regarding trading in stocks. It
is possible at this or some subsequent date, the editors and
staff of PremierInvestor.net may own, buy or sell securities
presented. All investors should consult a qualified professional
before trading in any security. The information provided has
been obtained from sources deemed reliable but is not
guaranteed as to accuracy or completeness. PremierInvestor.net
staff makes every effort to provide timely information to its
subscribers but cannot guarantee specific delivery times due to
factors beyond our control.

Please read our disclaimer at:
http://www.optioninvestor.com/page/oin/aboutus/disclaimer.html

*****************************************************************
ADVERTISING INFORMATION

For more information on advertising in PremierInvestor.net
Newsletter, or any Premier Investor Network newsletter please
contact Contact Support.

*****************************************************************


Copyright  2002  PremierInvestor.net. and
The Premier Investor Network.
Do not duplicate or redistribute in any form.

DISCLAIMER

Option Investor Inc is neither a registered Investment Advisor nor a Broker/Dealer. Readers are advised that all information is issued solely for informational purposes and is not to be construed as an offer to sell or the solicitation of an offer to buy, nor is it to be construed as a recommendation to buy, hold or sell (short or otherwise) any security. All opinions, analyses and information included herein are based on sources believed to be reliable and written in good faith, but no representation or warranty of any kind, expressed or implied, is made including but not limited to any representation or warranty concerning accuracy, completeness, correctness, timeliness or appropriateness. In addition, we do not necessarily update such opinions, analysis or information. Owners, employees and writers may have long or short positions in the securities that are discussed.

Readers are urged to consult with their own independent financial advisors with respect to any investment. All information contained in this report and website should be independently verified.

To ensure you continue to receive email from Option Investor please add "support@optioninvestor.com"

Option Investor Inc
PO Box 630350
Littleton, CO 80163

E-Mail Format Newsletter Archives