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Daily Newsletter, Thursday, 09/12/2002

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PremierInvestor.net Newsletter                 Thursday 09-12-2002
                                                    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:      Bullish Sentiment Suffocating
Play-of-the-Day:  Chipping Away At the Bulls
Market Sentiment: Still On the Sidelines


************************************************************
MARKET WRAP  (view in courier font for table alignment)
************************************************************
      09-12-2002           High     Low     Volume Advance/Decline
DJIA     8379.41 - 201.76  8574.94  8359.09  1.18 bln   885/2332
NASDAQ   1305.72 - 35.77   1305.72  1279.09  1.17 bln   1034/2112
S&P 100  443.23  - 12.18   454.80   442.06     Totals   1919/4444
S&P 500   886.91 - 22.54   909.45   884.84 
RUS 2000  386.27 - 7.10    393.37   386.19 
DJ TRANS 2253.27 - 44.05  2298.86  2245.57   
VIX        40.72 +  9.37    41.07    39.09   
VXN        56.44 +  2.44    56.85    54.05
Total Vol    2,2357
Total UpVol   298
Total DnVol  2015
52wk Highs     61
52wk Lows     155
TRIN         2.85
PUT/CALL     0.23
*************************************************************

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

Bullish Sentiment Suffocating
By John Seckinger 

During trading on Wednesday, the Dow appeared intent on breaking 
above 8800 and closing above its 50 DMA, currently at 8744.  Just
one day later, sentiment takes a turn for the worse as selling 
pressure intensifies and bulls run to the sidelines.

It all started on Thursday with a troubling Initial Claims report 
for the week of September 7th, rising 17,000 to 426,000 and placing 
this highly-watched indicator at its highest weekly reading since 
April 20th.  This is the third week above 400k and a continued rise 
could begin to seriously affect the labor market going forward.  
The shortened Labor Day holiday work week could have been 
responsible for volatility within Thursday's report; however, the 
more reliable four-week moving average rose and diluted any 
possibility for a bullish spin. This labor report seemed to be the 
catalyst for traders rushing into US Treasuries and selling equity 
positions in order to raise cash.  

It wasn’t much longer when equity holders had to deal with more bad 
news.  This time it was a report on the current account, rising a
staggering 15.6% in the 2Q to a record 129.96 billion.  As the 
report was read, fixed income traders began selling the US dollar 
and seeking bonds as a safe haven.  Analysts commented later in 
the day that the deficit is unsustainable and poses a risk to the 
U.S. and global economic outlook.  Analysts made it clear that 
negative implications if such a deficit continues include the 
dollar plunging.  

What else did bullish traders have to contend with on Thursday?  
Former CEO of Tyco, Dennis Kozlowski, and others likely to face 
criminal charges due to millions received in unauthorized 
compensation.  Shares of TYC fell fractionally, closing at 17.79 
and still above both its 22 and 50 DMA’s.  The saving grace may 
have been JPM organ upgrading the company to “buy” before the 
day’s session got underway.  

More impacting news included Lehman cutting their 2003 forecast for 
revenue growth in the Semiconductor Equipment industry to 10-15 
percent from their previous forecast of 27 percent.  Also significant
was shares of AOL falling 6 percent and closing under its 22 DMA, 
following Goldman Sachs cutting their EBITA estimates on the company
due to unresolved issues.  AOL is in the process of creating a less 
top-heavy management structure, as well as dismantling its business 
affairs unit.  AOL’s business affairs unit is currently getting 
Federal attention due to opaque accounting practices by the division.  

Possibly as early as Friday morning, AOL might make the headlines 
of the Wall Street Journal.  This will most likely be a headline 
the company would rather not see.  Expected in the story are the 
aforementioned issues as well as AOL’s cash flow expected to 
increase by only 2 percent instead of the 5-9 percent forecast by 
the company.  

Continuing the theme of bellwether companies, shares of McDonalds 
(MCD) fell almost five percent on Thursday following cautious 
comments from Goldman Sachs.  Inside the comments was skepticism 
over the company’s quality and service initiatives; most likely
reducing earnings growth in the near term.  How does McDonald’s 
five-percent loss and new multi-year low rank with other issues 
inside the Dow Jones?  The company gets a bronze medal for worst 
session.  See chart below.  



Disclaimers:  I do not like rumors, especially when it has to do 
with a company such as IBM.  Nevertheless, shares did fall 3 
percent to 71.87 and was recently a successful put play for the 
OI team (which includes myself).  Therefore, to the rumor we go:  
Speculation that the company will lower their guidance for the 
near future.  Defending the company was Soundview, noting that 
IBM has no way of knowing this early if the quarter will fall 
short of expectations.  Also explained by Soundview was that both 
the CFO and head of Investor Relations are out of the country.  
Sound convincing?  

Squarely on traders’ minds as the trading session took hold was 
both President Bush’s speech to the UN General Assembly and Alan 
Greenspan’s talk before the House Budget Committee.  President 
Bush said that “action will be unavoidable” against Iraq unless 
the U.N. takes a hard line forcing Baghdad to disarm.  Overall, 
the speech appeared to be uninspiring to equity holders and the 
current selling pressure continued.  Fed Chairman Alan Greenspan 
made it clear before the House Budget Committee that Congress 
needs to be more vigilant with fiscal discipline.  His speech was 
focused almost entirely on the budget outlook and need to reenact 
spending restraint measures enacted back in 1990.  These measures 
expire on September 30th.  

After all of that, should any trader in their right mind be bullish?
As losers outnumbered winners by a ratio of roughly 3:1 on the 
NYSE, the 201.76 point loss to 8379.41 might just be a sign of 
exhaustive selling.  Therefore, Friday could be a victory for 
the bulls.  Volume came in at a light 1.1 billion for both the 
Big Board and Nasdaq.  Speaking of other indices, the tech-laden 
Nasdaq lost 35.77 points, or 2.72 percent, to 1279.68, the S&P 500 
shed 22.54 points, or 2.48 percent, to 886.91, and the Nasdaq-100 
(QQQ) fell 2.72 percent to close at 22.81.  

Chart of Dow Jones Industrial Average Index, Daily



As the chart shows, price action on Friday might have some serious 
implications for traders wanting to remain bullish.  Primarily, 
the blue trend line which was drawn on September 5th needs to hold.  
A move under 8330 should confirm a break in trend.  Support 
underneath could be found at 8215, but then the double-bottom 
would become a triple-bottom and dilute its strength.  If responsive 
buying does take place on Friday, the Dow is expected to test the 
22 DMA (currently at 8589) once again.  The bearish red trend line 
is currently at 8669.  Of course, as Steve and Jim pointed out, the 
Dow might be in the process of forming a Head & Shoulders formation; 
projecting an objective (calculated by myself) of near 7300.  

Without getting into the Intermarket Relationships to much, one 
concern today was the Dollar’s failure to settle above its 50 DMA, 
currently at 107.45.  Closing down 0.41 percent at 107.18, there 
is now a good chance (based on recent history) that the Dollar 
will weaken further towards its 22 DMA, currently at 106.92.  A 
weaker dollar is good for gold and bad for stocks, in theory.  
Speaking of Gold, the 4.29 percent rise to 76.09 places the index 
that much closer to my 80.90 intermediate objective.  

Oil, Utilities, and bonds all traded with a bearish slant towards 
equities.  It is the significant drop in yields within the 30-year 
bond that might also be of concern for equity holders.  The TYX.X 
index saw yields lower by 1.25 percent and, like the Dow, rests on 
a substantial area of support.  It is my opinion that the Dow will 
lead all indices during trading on Friday.  

Getting back to the major equity indices, a chart of the Nasdaq 
shows the possibility that the tech-laden index will go down and 
test the relative low of 1192 set during the week of July 21st.  
If this happens, there will be a good change that low will end 
up failing bullish traders and becoming resistance down the road.

Chart of the Nasdaq Combined Composite Index, Weekly 



What could be the catalyst during trading on Friday?  Well, the 
Producer Price Index (8:30 a.m.) should take a backseat to both 
the Retail Sales report (8:30 a.m.) and Michigan Consumer sentiment 
figure (9:45 a.m.).  The August Retail Sales report is expected to 
show a rise of 0.8 percent, adding to July’s 1.2 percent upswing.  
This key report on consumer spending should rise based on recent 
incentives by auto manufactures and buying of back to school 
accessories.  The Michigan Consumer Sentiment report is expected 
to rise fractionally to 88 from 87.6, buoyed by higher growth 
expectations and hope business investment will turn around.  
Risks include possible war, recession, weak labor market, lower 
stock prices, and 10 percent fall in the index over last three 
months.  Clearly there are more cons than pros.

With the potential for more downgrades, accounting concerns, 
terrorist threats, war, and weak economic reports looming large, 
deteroriating bullish sentiment can still be salvaged.  In fact, if 
the major indices find support and further establish the established
bullish trend line, it might actually be the bears hibernating early this winter.

John Seckinger


===============
Play-of-the-Day   (New BEARISH tech play)
===============

Maxim Integrated - MXIM - close: 39.61 change: -2.80 stop: *text*

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

Why We Like It:
Hope springs eternal, and semiconductor bulls had theirs' lifted 
by the recent action in the SOX.X.  The index rebounded from its 
multi-year lows, despite more evidence of weakness from the likes 
of INTC, NVLS, and others.  The lack of a "sell the bad news" 
reaction seemed to indicate that the SOX's extended decline had 
outpaced the fundamental (albeit very hazy) outlook for future 
growth.  From a technical perspective, most chip stocks had 
suffered intense selling and were overdue for a relief rally.  
Unfortunately for the bulls, today's action dashed nearly all 
hopes that the semiconductor group had put in a bottom.  Lehman 
Brothers said this morning that its 2003 growth forecast for the 
semiconductor equipment sector had been reduced from 27% to 10%.  
LEH cited data points that indicate continued fundamental 
weakness.  Piper Jaffray added fuel to the bearish fire by 
cutting estimates on several semi equipment stocks, including 
sector leader AMAT.  The firm believes a continued tepid capital 
spending environment will weigh heavily on the group.  

Of course, this is not stunning news.  We've known for some time 
that the prospects for a pickup in IT spending remain highly 
tentative.  A week ago, when chip bulls were out in full force, 
negative brokerage comments would not have led to a widespread 
sell-off.  Today's sizeable 6.0% decline in the SOX.X indicates 
that the longer-term bearish trend is still in place.  The index 
has rolled over from psychological resistance at 300 and looks to 
be on a crash course with support at 275.  The faltering daily 
stochastics (5,3,3) suggest that this level may eventually fail.  

MXIM is also threatening a breakdown to multi-year lows.  The 
company wasn't directly implicated in today's downgrades, but its 
analog products have seen a similar reduction in demand.  
Although shares experienced heavy selling today, the daily 
stochastics (5,3,3) are just beginning to reverse near the 
midlevel.  This is an indication that the bears are not yet 
finished with MXIM.  With no underlying support levels, shares 
could experience a rapid decline if the sector remains weak.  
We'll enter this short play on a move below the multi-year low of 
$27.45.  If all goes as planned we'll see MXIM fall below $27.00 
(thus creating a triple-bottom p-n-f sell signal) and make its 
way toward psychological support at $25.00.  Shorter-term traders 
could target a move to this level.  We're going to look for a 
more severe sell-off that takes the stock all the way to the 
$20.00 region.  If our play is triggered we'll use a stop at 
$30.06, above both today's high and psychological resistance at 
$30.00.  Those with a greater risk tolerance could use a stop 
slightly above Wednesday's high of $31.62.

Picked on September xxth at $xx.xx <- see text
Gain since picked:           +0.00
Earnings Date             11/05/02 (unconfirmed)
 




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

Still On the Sidelines

by Steven Price

If getting 9/11 out of the way isn't going to rally the markets 
by bringing buyers in from the sidelines, it appears it will be a 
while before the Dow tests 9000 once again. Yesterday's failure 
at the 50-dma looked bearish and today's drop has only furthered 
that sentiment.  

Alan Greenspan testified before the Congressional Budget 
Committee today, but focused on reducing deficit spending in the 
long-term, rather than talking about the economy.  He said our 
discipline has faded in the past year as we've increased military 
spending, cut taxes and spent on various emergencies.  He favored 
linking tax cuts and spending to budget forecasts, so that we 
don't undo years of hard work in reigning in the budget deficit.  
Regarding interest rates, he said, "The economy appears to have 
withstood this set of blows well, although the depressing effects 
still linger."  This sounds an awful lot like the last FOMC 
announcement, which left rates unchanged, but shifted to an 
easing bias due to economic risks.  My guess is that the 
September 24th FOMC meeting will yield a similar statement.  

President Bush spoke to the U.N., essentially making his argument 
for a change of regime in Iraq.  While he used tough rhetoric, it 
sounded as though he was giving the U.N. time to fix the problem 
before the U.S. took military action.  The oil markets seemed to 
agree, as Crude Oil futures fell 0.92  to  28.85.  After holding 
over $29/barrell since September 6, this move is significant, as 
it foreshadows some time lag before U.S. action is taken.  

This morning's jobs report showed more bad news for the economy.  
Layoffs have surged, raising the four-week moving average by 
8,750 to 409,500, which is a three-month high.  First time claims 
rose 17,000 to 426,000, which is the highest level since April 
20.

A look at the Dow shows what appears to be the formation of a 
head and shoulders formation, with the right shoulder being 
formed by yesterday's failure at the 50-dma and today's 201.76 
drop. You can see a chart of this formation in Wednesday's Market 
Wrap, minus today's drop.  The neckline violation, a very bearish 
sign, does not actually come for another 150 points or so to the 
downside, but if we break through that level, we could see a 
retest of July's lows.  A similar formation can be seen in the 
S&P 500,  NDX and the Nasdaq Composite.  They all failed the 50-
dmas yesterday and will most likely dive in concert if we see a 
joint neckline break.  

After the bell, software maker Adobe Systems (ADBE) released 
earnings that beat the street by 0.03 and traded up over $2.50 
from a close of  $18.45 to $21.10.  This could spur a tech rally 
tomorrow, as it is the first good news in some time.  Adobe 
forecast growth in the current quarter, which is something we 
haven't heard from the tech sector .

On the other hand, Honeywell (HON) lowered estimates for the 
third quarter and full year 2002, stating that the economic
 recovery is not materializing.

From a technical standpoint, things look bleak, but not as bleak 
as they will if the head and shoulders neckline is broken is the 
major indices.  The news from Adobe could be the catalyst for a 
rally that prevents that breakdown, however.  Look for a rally in 
the techs tomorrow, and then watch the 50-dma above for signs of 
failure.


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

Market Averages

DJIA ($INDU)

52-week High: 10679
52-week Low :  7702
Current     :  8379

Moving Averages:
(Simple)

 10-dma: 8466
 50-dma: 8601
200-dma: 9643

S&P 500 ($SPX)

52-week High: 1226
52-week Low :  797
Current     :  886

Moving Averages:
(Simple)

 10-dma:  898
 50-dma:  903
200-dma: 1054

Nasdaq-100 ($NDX)

52-week High: 1782
52-week Low :  892
Current     :  915

Moving Averages:
(Simple)

 10-dma:  927
 50-dma:  960
200-dma: 1293


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



The Semiconductor Index (SOX.X): The SOX just can't seem to hold 
its support.  After teasing us with a hold over 300, it was right 
back down to 283.50.  We're not piling on short just yet, as we 
will look for a re-test of support at 275.  "Support" in this 
case is a tenuous term as we are really just referring to the 
recent 52-week low from which the failed rebound took place.  
Adobe's news after the bell should be good for the Software 
Sector, and in turn may lift the other techs as well.  If 
forecasting growth and beating earnings doesn't get the engine 
rolling, then look for the SOX to test 275 sooner rather than 
later.

52-week High: 657
52-week Low : 275
Current     : 283

Moving Averages:
(Simple)

 10-dma: 291
 50-dma: 331
200-dma: 480


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

Market Volatility

Here we are back over 40.  Today's drop, after Alan Greenspan's 
testimony and a bleak jobs report, reminded everyone of the 
downside potential still lurking below 8200 in the Dow.  A trip 
below 8200 looks like it could land us back at 7500, and the last 
time that happened the VIX was almost 50% higher, near 60.  It 
will be hard to get through a September/October cycle without the 
VIX remaining high, judging by past years. The next time we see 
the 20s could be November.

CBOE Market Volatility Index (VIX) = 40.72 +3.49
Nasdaq-100 Volatility Index  (VXN) = 56.44 +2.44

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

          Put/Call Ratio  Call Volume   Put Volume

Total          0.91        483,086       440,097
Equity Only    0.67        379,687       252,771
OEX            1.46         25,439        37,308
QQQ            0.45         90,859        40,433

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

Bullish Percent Data

           Current   Change   Status
NYSE          43      + 0     Bull Confirmed
NASDAQ-100    42      + 8     Bull Correction
DOW           52      + 2     Bull Correction
S&P 500       52      + 1     Bear Confirmed
S&P 100       48      + 2     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  1.16
10-Day Arms Index  1.39
21-Day Arms Index  1.28
55-Day Arms Index  1.31

Extreme readings above 1.5 are bullish, and readings below .85 
are bearish.  These signals don't occur often and tend be early, 
but when they do, they can signal significant market turning 
points.

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

Market Internals

        Advancers     Decliners
NYSE        681          2054
NASDAQ     1035          2111

        New Highs      New Lows
NYSE         21              14
NASDAQ       45              89

        Volume (in millions)
NYSE     1,372
NASDAQ   1,186


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

Commitments Of Traders Report: 09/03/02

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 6,000 contracts to the long side, while 
reducing shorts by only 500, in what appears to be a stockpiling 
in anticipation of extreme movement next week. Small traders 
increased both long contracts and short, adding 5,000 to the long 
side and 8,000 to the short side.


Commercials   Long      Short      Net     % Of OI 
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%)
09/03/02      431,755   468,529   (36,774)   (4.1%)

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
08/13/02      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%
09/03/02      158,262    80,130    78,132     32.8%

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 added 2600 short contracts and only 1400 longs, while 
small traders got longer, adding 1,000 longs and reducing short 
positions by 300.


Commercials   Long      Short      Net     % of OI 
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%)
09/03/02       46,712     53,287    (6,575) ( 6.6%)

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
08/13/02       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%
09/03/02       11,150     7,720     3,430    18.2%

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 short positions slightly, reducing risk 
heading into next week, while small traders reduced both sides by 
about 500 contracts. 


Commercials   Long      Short      Net     % of OI
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%
09/03/02       21,161    13,792    7,369      21.1%

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
08/13/02        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%)
09/03/02        6,395     7,966    (1,571)   (10.9%)

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

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




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PremierInvestor.net Newsletter                 Thursday 09-12-2002
                                                    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
  New Bearish Plays:     MXIM
  Bullish Play Updates:  CTSH, LLL
  Closed Bullish Plays:  QQQ

Stock Bottom / Active Trader
  New Bearish Plays:     AEP, GE
  Bullish Play Updates:  CLX
  Bearish Play Updates:  AGN, DUK
  Closed Bullish Plays:  AGY
  Closed Bearish Plays:  CB

High Risk/Reward
  Bullish Play Updates:  CA
  Closed Bullish Plays:  CPWR, SCH, SMH

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


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

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

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

Maxim Integrated - MXIM - close: 39.61 change: -2.80 stop: *text*

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

Why We Like It:
Hope springs eternal, and semiconductor bulls had theirs' lifted 
by the recent action in the SOX.X.  The index rebounded from its 
multi-year lows, despite more evidence of weakness from the likes 
of INTC, NVLS, and others.  The lack of a "sell the bad news" 
reaction seemed to indicate that the SOX's extended decline had 
outpaced the fundamental (albeit very hazy) outlook for future 
growth.  From a technical perspective, most chip stocks had 
suffered intense selling and were overdue for a relief rally.  
Unfortunately for the bulls, today's action dashed nearly all 
hopes that the semiconductor group had put in a bottom.  Lehman 
Brothers said this morning that its 2003 growth forecast for the 
semiconductor equipment sector had been reduced from 27% to 10%.  
LEH cited data points that indicate continued fundamental 
weakness.  Piper Jaffray added fuel to the bearish fire by 
cutting estimates on several semi equipment stocks, including 
sector leader AMAT.  The firm believes a continued tepid capital 
spending environment will weigh heavily on the group.  

Of course, this is not stunning news.  We've known for some time 
that the prospects for a pickup in IT spending remain highly 
tentative.  A week ago, when chip bulls were out in full force, 
negative brokerage comments would not have led to a widespread 
sell-off.  Today's sizeable 6.0% decline in the SOX.X indicates 
that the longer-term bearish trend is still in place.  The index 
has rolled over from psychological resistance at 300 and looks to 
be on a crash course with support at 275.  The faltering daily 
stochastics (5,3,3) suggest that this level may eventually fail.  

MXIM is also threatening a breakdown to multi-year lows.  The 
company wasn't directly implicated in today's downgrades, but its 
analog products have seen a similar reduction in demand.  
Although shares experienced heavy selling today, the daily 
stochastics (5,3,3) are just beginning to reverse near the 
midlevel.  This is an indication that the bears are not yet 
finished with MXIM.  With no underlying support levels, shares 
could experience a rapid decline if the sector remains weak.  
We'll enter this short play on a move below the multi-year low of 
$27.45.  If all goes as planned we'll see MXIM fall below $27.00 
(thus creating a triple-bottom p-n-f sell signal) and make its 
way toward psychological support at $25.00.  Shorter-term traders 
could target a move to this level.  We're going to look for a 
more severe sell-off that takes the stock all the way to the 
$20.00 region.  If our play is triggered we'll use a stop at 
$30.06, above both today's high and psychological resistance at 
$30.00.  Those with a greater risk tolerance could use a stop 
slightly above Wednesday's high of $31.62.

Picked on September xxth at $xx.xx <- see text
Gain since picked:           +0.00
Earnings Date             11/05/02 (unconfirmed)
 




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

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

Cognizant Tech. - CTSH - cls: 63.11 chg: -0.57 stop: 59.65

Shares of CTSH have worked their way steadily higher over the 
past two weeks.  The stock witnessed some subdued profit-taking 
on Thursday as shares pulled back with the broader market and 
traded an Inside Day.  Today's relative strength is a positive 
sign for this play.  The fact that CTSH has maintained its 52-
weeks in the face of a weakening broader market is an indication 
that a test of the $65.00 level could be forthcoming.  On Friday 
we'll be looking for the stock to move above the relative high of 
$64.17.  Aggressive traders can consider long entries on a break 
above this level.

Picked on September 9th at $61.40 
Results since picked:       +1.71
Earnings Date            07/15/02 (confirmed)
 



--- 

L-3 Comm. - LLL - close: 55.70 change: -0.11 stop: 52.38

Both the Dow Jones and NASDAQ were hit with heavy selling on 
Thursday, but that wasn't the case with shares of L-3.  Investors 
seemed to be happy with the news that LLL had signed a deal to 
buy Northrop Grumman's Electron Devices unit and its Displays-
Navigation Systems business.  The stock traded in positive 
territory for most of the session before being dragged to a small 
loss.  This relative strength bodes well for the bulls.  Looking 
at the daily bar chart, we're also encouraged with the way LLL 
has held above the $55.00 level.  A pullback to consolidate some 
of the past weeks' gains could be expected, but thus far the 
bears haven't been able to exert any control.  This is an 
indication that LLL might make its way toward the $60.00 region 
if the broader market rebounds.  New entries could be gauged on a 
move above Wednesday's high of $56.76.  Keep in mind that our 
initial profit-target lies at $59.99.

Picked on September 9th at $53.25 
Results since picked:       +2.45
Earnings Date            07/16/02 (confirmed) 





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

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

NASDAQ 100 Shares - QQQ - close: 22.81 change: -0.64 stop: 21.90

The newsletter had thought that the market could see an emotional 
rally after 9/11, however, it seems that investors are not so 
eager to put their money back into equities.  Thus, the 
newsletter is going to drop the QQQ play at current levels 
(22.81) in light of technical weakness displayed in the last two 
days of trading.  Yesterday, the QQQ's moved up to the 50-dma, 
but failed right on queue.  Because the Nasdaq composite could 
not gain bullish support to elevate above the moving average, we 
do not want to risk a long play if bears begin to chomp at the 
bit.  Longs' electing to hold their positions are encouraged to 
use a very strict stop just below recent relative lows.  Until 
better economic news surfaces, or company fundamentals improve, 
new long positions are not encouraged at this time.  Our play has 
been closed for a hypothetical loss of 1.8%. 

Picked on September 9th at $23.23 
Results since picked:       -0.42
Earnings Date                 N/A






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

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

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

American Electric Pwr. - AEP - cls: 29.26 chg: -0.74 stop: *text*

Company Description:
American Electric Power is a multinational energy company with a 
balanced portfolio of energy assets. AEP, the United States' 
largest electricity generator, owns and operates more than 42,000 
megawatts of generating capacity in the U.S. and select 
international markets. AEP is a leading wholesale energy 
marketer, ranking among North America's top providers of 
wholesale power and natural gas with a growing wholesale presence 
in European markets. (source: company press release)

Why We Like It:
AEP has been struggling to keep its bottom line afloat, as the 
company has several plants that require the purchase of power for 
below its current production costs.  This is good news for 
investors, but the time delay in which the plants will close by 
the end of the year is causing some to re-allocate their 
portfolios away from this stock.  Further, recent displacement of 
utility generation has caused electricity prices to drop, with 
over-capacity squeezing profit margins.

This fundamental negativity has dragged AEP to relative lows.  
Today's trading saw the stock abandon the $30.00 level on 
stronger-than-normal volume.  A glance at the daily bar chart 
shows there are no clear levels of underlying support.  This 
means a sell-off could quickly lead to a retest of the July lows 
near $23.00.  Although the daily stochastics are already residing 
in the oversold region, the rolling MACD indicates that more 
downside lies ahead.  Further technical bearishness can be 
garnered from the point-and-figure chart, which is currently 
signaling a double-bottom breakdown.  The overall utility sector 
has displayed recent weakness as well, with the Utility Index 
(UTY.X) falling below the 50-dma and the MACD failing at the 0 
line.  In terms of action points, we'll activate this short play 
if AEP trades below $28.99.  If triggered, we'll use a stop at 
$31.01, one cent above Wednesday's high.  Ultra-conservative 
traders could use a stop slightly above today's high of $30.04.  
Note that we won't enter this play if for whatever reason AEP 
gaps below $28.00 on Friday morning. 

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



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



---

General Electric - GE - cls: 28.00 chg: -1.00 stop: *text*

Company Description:
General Electric has been bringing good things to life for more 
than a century, and sells products under the Monogram®, 
Profile(TM), GE®, Hotpoint®, and SmartWater(TM) brands.
(source: company press release)

Why We Like It:
Sometimes no news is good news.  However, GE has recently 
witnessed slightly sour press over possible asbestos woes and 
former CEO John F. Welch Jr.'s retirement package.  Investors 
have expressed disapproval to Mr. Welch's golden (or platinum?) 
parachute, which includes autos, electronics, flowers, faxes, 
food, country club fees, tickets to sporting events, and air 
transportation.  Welch's jet rides are valued monthly at 
$291,869.00.  Understandably, investors are a little red about 
that one.  Further, GE is among the 250 world corporations 
petitioning the U.S. Supreme Court to soften the blow or halt 
asbestos compensation trials.  The most recent trial in West 
Virginia including 8,000 claimants could cost them hundreds of 
millions of dollars.  Even more worrisome, analysts predict that 
total asbestos liabilities could be in the billions for America 
alone.  

Investigating technical developments on the daily chart, GE broke 
support today at $28.00.  The Stock recently failed at the 50-dma 
($29.60), and has moved lower in the last two sessions.  Daily 
Stochastics are in the oversold region, and the daily MACD has 
drifted underneath the 0 line into the lower region.  On the P&F 
chart, GE just produced a double bottom breakdown, which is 
statistically 82.1% profitable over 4.7 months.  We are 
anticipating a possible test of lows in shorter time, and thus, 
GE will make the cut to our bearish play list. 

Our plan for GE is fairly simple; we will place our trigger one 
cent below today's low at $27.84.  If the stock does trade lower 
and our paper position is activated, we will place our initial 
stop at $29.71, just above yesterday's high and the 50-dma.  
Initially, the newsletter will target a move to $24.01, just 
above secondary support on the P&F chart.  If the stock does 
begin to move in our favor, traders should expect support in the 
$26.50 region, where bulls could be defenders.  If all goes as 
planned, the bulls could get a general electric shock!

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



Picked on September xxth at $xx.xx <-- See text 
Results since picked:        +0.00
Earnings Date             07/12/02 (confirmed)
 




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

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

Clorox Corp - CLX - close: 42.68 change: -0.77 stop: 41.99

Triggered yesterday at $41.99, this play could be a bull trap.  
With Greenspan making negative comments today, the market seemed 
to find weakness in light of a continued poor economic 
environment.  The Dow closed down -2.35% at 8379.41, while CLX 
fell only -1.77%.  Today's move could have bulls slightly 
worried, as the failed breakout could indicate future selling.  
However, the newsletter will not move its stop just yet, leaving 
it at $41.99, attempting to give the stock room to wiggle.  
Clorox had no fresh news surface today.  

Picked on September 11th at $41.99
Results since picked:        -0.69
Earnings Date             08/07/02 (confirmed)




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

Allergan - AGN - close: 54.00 change: -0.77 stop: 56.11 *new*

Allergan dipped slightly on the day falling to $54.00.  The 
company is still fighting the FDA, which is said to be a "rare 
move".  Letters from the FDA to change advertising content are 
fairly common, however, Allergan's response is a very rare 
occurrence.  Overall, unless a court battle ensues, the fight 
won't affect the company's bottom line.  Even so, bears are 
encouraged by the stock's recent descending move, which.  The 
MACD has descended into the lower region and could signal further 
selling on the horizon.  Further, the Pharmaceutical Index found 
weakness in today's session, though a move below the 50-dma is 
still needed to entice additional sellers.  Daily Stochastics are 
entering the oversold region, and could help to bring technical 
bears off the fence.  The newsletter will move the stop down to 
just three pennies above yesterday's high at $56.11.    

Picked on September 11th at $54.69
Results since picked:        +0.69
Earnings Date             10/24/02 (confirmed)




---

Duke Energy - DUK - close: 22.54 change: -0.77 stop: 25.67

Amid speculation that debt ridden energy companies could be 
exposed to steep refunds, Duke Energy is among the list of those 
vulnerable.  Whether or not this will affect the company's bottom 
line is yet to be seen, though investors are certainly backing 
away from the energy sector in light of potential earnings 
guidance lower.  Duke has witnessed weakness in the company's 
stock recently, as the MACD trends beneath the 0 line.  Bears are 
encouraged by the most recent move, and could have their sites 
set on testing relative lows in the $18.50 area.  The newsletter 
will leave the stop at current levels, continuing to anticipate a 
move to the $20.00 region.    

Picked on September 11th at $23.74 
Results since picked:        +1.20
Earnings                  10/15/02 (unconfirmed)





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

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

Argosy Gaming Co. - AGY - cls: 27.01 chg: -1.00 stop: 26.58

This morning, Merrill Lynch downgraded AGY to "neutral" from 
"buy", causing the stock to tumble on the day.  The downgrade 
came on possible concerns of increased competition, cash 
hindering expansion projects, and looming legislation changes, 
which could affect growth.  Investor's concurred with the 
downgrade pushing AGY down -$1.00 on the day, and our position 
was stopped out at $26.58 right after the news was released.  
Traders still in long positions are urged to use caution, as 
today's move could bring further technical sellers of the fence.  
However, bulls are slightly encouraged that the stock was able to 
close above the 50-dma at $26.72.

Picked on September 6th at 28.40
Results since picked:      -1.39
Earnings Date           07/23/02 (confirmed)
 



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

Chubb Corporations - CB - cls: 61.80 chg: -0.32 stop: 62.11 

Although Chubb announced that it would seek a new CEO by the end 
of the year, CB displayed additional weakness in today's session.  
However, our play was concluded yesterday when the stock moved 
above our stop at $62.11.  Bears are encouraged by the weakness 
in the Insurance Sector (IUX.X), and CB's recent failure at the 
50-dma.  The newsletter moved our stop down to protect a small 
gain against emotional buying if September 11th passed without a 
hitch.  Even though anniversary passed without much fanfare and 
buyers did not surface, we must stick to our guns and close this 
play at our designated stop of $62.11.  Bears could still 
maintain positions, but would want to institute a stop above the 
50-dma at $62.34.  If Chubb cannot find strength in the next few 
sessions bulls could begin scrambling for the hills.        

Picked on August 28th at $62.49
Results since picked:     +0.38
Earnings Date          07/29/02 (confirmed)






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

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

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

Computer Assoc. - CA - cls: 11.45 chg: -0.39 stop: 10.94

Most tech stocks saw concerted selling on Thursday, and CA was no 
exception.  Shares gapped lower this morning and finished with a 
loss of 3.2%.  However, the bears were unable to push the stock 
under its falling 50-dma at $10.97.  CA finished just nine cents 
off the best levels of the day.  This suggests that short-term 
selloff may have run its course.  Tomorrow's action could see CA 
bounce back sharply, with the company holding an Analyst Day 
conference at 9:00 AM EDT.  For those interested, a webcast of 
this conference will be available at http://ca.com/invest/.  
Positive news in the form of new product announcements or upside 
earnings guidance could send the company's stock to new relative 
highs.  If this is the case, aggressive traders can target new 
entries on a move above $12.37.

Picked on September 11th at $12.35 
Results since picked:        -0.90
Earnings Date             07/22/02 (confirmed)
 




===============
HR Closed Plays
===============

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

Compuware Corp - CPWR - close: 3.30 change: -0.51 stop: *text*

On Tuesday we lowered this play's entry trigger to $4.11.  Our 
altered strategy was an effort to take advantage of a rally off 
the $4.00 level, which has been solid resistance for CPWR.  As it 
turns out, the bears were unwilling to yield during the recent 
rally.  Shares have sold off sharply during the last two sessions 
on no apparent news.  Today's decline was especially brutal, at 
13.3%.  Although volatility is somewhat common in cheaply-priced 
stocks, the downtrending daily stochastics indicate that a 
breakout will not occur in the near future.  Thus, we're dropping 
this un-triggered play tonight.

Picked on September xxth at $xx.xx <--- see text 
Results since picked:        +0.00
Earnings Date             10/17/02 (confirmed)
 



---  

Charles Schwab - SCH - close: 9.45 change: -0.57 stop: 9.44

On Thursday morning Bear Stearns initiated coverage on SCH with a 
"peer perform," or "hold" rating.  The firm said Schwab has a 
strong brand name but may suffer from investor nervousness and 
restructuring-related concerns.  They also issued a 52-week price 
target of $11-$12.  These lukewarm comments, combined with the 
broader market weakness, resulted in a 5.6% decline.  Our play 
was stopped out for a loss of 10.5% when shares violated hit 
$9.44 during the final 10 minutes of trading.  At this point it 
appears the recent rally above $10.00 may have been a bull trap.  
However, it's worth noting that the recent uptrend (most readily 
visible on a 30-minute chart) is still intact.  Traders still 
long should be looking for a bounce from current levels.  A move 
below today's low ($9.36) could lead to another round of selling.

Picked on September 11th at $10.55
Results since picked:        -1.11
Earnings Date             10/17/02 (confirmed)
 



---

Semiconductor HOLDRS - SMH - cls: 22.90 chg: -1.61 stop: 21.98

The chip group had recently shown an ability to shake off bad 
news.  Such was not the case today when Lehman Brothers slashed 
their growth estimates for semiconductor equipment revenues in 
2003.  The brokerage cut its forecast from 27% to 10%, citing 
channel checks that indicate eroding fundamentals.  Several firms 
have already issued bearish comments in the sector, so today's 
comments aren't exactly a surprising revelation.  Nonetheless, 
the SOX.X was hammered for a loss of more than 6%.  The index 
rolled over from psychological resistance at 300 and closed under 
short-term support at 290.  Despite the sector negativity, the 
SMH never reached our stop-loss.  However, we have elected to 
drop this play as of today's close.  This represents a loss of 
2.0% from our entry point.  With the SOX.X failing at overhead 
resistance and the daily stochastics reversing lower, a retest of 
the 275 region appears likely.  As a matter of fact, there are 
several chip stocks that are on the verge of a wholesale 
breakdown.  Tonight we've chosen one such stock (MXIM) as a new 
bearish play.

Picked on September 6th at $23.38 
Results since picked:       -0.48
Earnings Date                 N/A
 




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

RNR     Renaissancere Holdings     37.00     +1.00
PROV    Provident Financial        23.89     +0.83

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

CENT    Central Garden & Pet Co.  15.99     +1.12
TVX     Tvx Gold                  15.15     +1.08
HTCH    Hutchinson Technology Inc.16.80     +1.45
STLD    Steel Dynamics Inc.       14.78     +2.20
FRGO    Fargo Electronics Inc.     8.91     +1.00

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

BTSE    Biosite Inc.               24.46     +3.91
PRX     Pharmaceutical Resources   28.08     +3.04
AG      Agco Corp                  21.35     +1.27
TGI     Triumph Group Inc.         32.04     +1.13
DE      Deere & Co.                48.25     +1.31
AU      Anglogold Ltd.             27.48     +1.97

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

CBRL    Cbrl Group Inc.            23.28     -1.53
WEN     Wendy's International      31.59     -1.41
FITB    Fifth Third Bancorp        61.39     -1.67
PNRA    Panera Bread Co.           25.12     -1.24
MOLX    Molex Inc.                 26.49     -2.17
MTG     Mgic Investments Corp.     54.93     -2.07

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

UNBJ    Untied Natl Bancorp        21.38     -1.27
CHH     Choice Hotels Intl         23.68     -0.75
PNBC    Princeton Natl Bancorp     20.15     -0.04




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