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Daily Newsletter, Thursday, 09/19/2002

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PremierInvestor.net Newsletter                 Thursday 09-19-2002
                                                    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:      Count on It!
Play-of-the-Day:  Bad Credit and Fading Credibility
Market Sentiment: Lack Of Support


************************************************************
MARKET WRAP  (view in courier font for table alignment)
************************************************************
      09-19-2002           High     Low     Volume Advance/Decline
DJIA     7942.39 -230.10  8170.65  7939.83 1.76 bln    752/2459
NASDAQ   1216.44 - 35.70  1242.91  1216.19 1.48 bln   1037/2477
S&P 100   423.06 - 12.93   435.46   422.88   Totals   1789/4936
S&P 500   843.32 - 26.14   869.46   893.92 
RUS 2000  365.54 - 11.21   376.75   365.37 
DJ TRANS 2158.87 -  3.90  2211.96  2140.93   
VIX        46.16 +  5.27    46.72    43.95   
VXN        62.76 +  3.43    62.76    59.36 
Total Vol   3,447M
Total UpVol   377M
Total DnVol 3,052M
52wk Highs    89
52wk Lows    644
TRIN        1.98
PUT/CALL    1.22
*************************************************************

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

Count on It!

If you had thought a retest of the July lows was possible before 
you can count on it after today. Even more depressing is the 
thought that maybe those lows will be broken, not tested. Market
conditions are continuing to deteriorate and we are a long way
from being out of October. There are still a lot of companies 
which have not warned and the end of September is shaping up
as serious pothole. 

Dow Chart


Nasdaq Chart



It was an ugly day. Seems we are getting a lot of those lately. 
The futures before the open were down -15 from the 4:PM numbers
on Wednesday. This caused a straight -165 point drop to 8008.
The Dow bounced about +100 points from the lows and the 8000 
level held until 3:09 when sellers all joined together to break
the stalemate. Once below 8000 it was all over but the bleeding
and bleed it did. The Dow closed at 7942 and the low of the 
day. The Nasdaq lost a whopping -35 points to close at a low
not seen since the 1205 August 5th low. 

EDS profit warning last night turned into 50% haircut as the 
stock dropped from $36 to $17.23. Their warning also impacted
Dow component IBM, which dropped -4.75 to $64.90 in regular
trading. IBM has yet to warn and several analysts came to their
defense today. Considering today's drop to levels not seen
since 1998 a warning could easily push them under $60. INTC
dropped to $14.90 and a low not seen since Nov-1996. 

There was a flood of missed earnings today along with another
flurry of earnings warnings. TXI reported $.18 cents vs
estimates of $.52 cents. They sell concrete and the lack of
construction is hurting their business as well as weather
patterns in Texas where they are located. 

Morgan Stanley reported earnings of only $.55 cents a share
when analysts were expecting $.67 cents. The banker said
earnings were hit by weak trading results and declining 
merger and underwriting revenue. AG Edwards (nyse:AGE) fell
-6.1% after missing analyst's estimates by -13 cents. AKLM
fell -20% after warning of a pending shortfall. ASTE lost 
-29% after warning that it now expects a loss of -6 cents
instead of a gain of 11 cents. Belden Wire & Cable (BWC)
fell after warning that sales of fiber optics and network
cable would fall short due to a continued decline in 
capital expenditures.

Not all the news was bad. FDX beat estimates and soared +4.75
on strong growth in its ground business. They affirmed estimates
for the full year. The Dress Barn jumped +32% after beating 
the street on high margins and cost cutting. Herman Miller 
(MLHR) beat the street by a dime and gained +15% on strong
cost cutting and improved margins. Other winners included 
IM, MET, PAYX, AAII and STTX. Despite the -230 Dow there
were gainers although all the Dow stocks were negative. 

After the bell there was good news tonight instead of bad. 
JBL beat the street by a penny and said business conditions
had stabilized during the just completed quarter. They 
said the outlook for JBL was very positive and it expected
substantial growth in the coming quarters. Wow! A recovery?

Qualcomm jumped $2 in after hours when it announced that
chip orders for the 4Q would be around 20 million, four
million more than the last quarter. They also said the next
quarter would be stronger than expected due to strong demand
for their newer generation of chips.  

TEK reported earnings of 15 cents a share and easily beat
analyst's estimates of only 7 cents. It forecast only a
-5% drop in sales for the next quarter based on weakness 
in the optical market. 

After a bad day the news from JBL, QCOM and TEK was welcome.
The futures in after hours were up and expectations 
were improving for the open tomorrow. After a series of
bad opens and no major economic reports on Friday maybe
the stars are finally aligned in the bulls favor. 

Economics today were just another weight on the market. 
The jobless claims fell to 424,000 but from a strong 
upwardly revised 433,000 number from the prior week. The
economy is still losing steam with continuing claims
rising to 3.615 million. This is the highest level since
June 22nd. Housing Starts declined to 1.61 million and
well below consensus of 1.65 million. This is the third
consecutive drop in starts and could be indicating the
end of the demand cycle. Single family starts were the 
slowest since Nov-2001. The Philadelphia Fed Survey came
back from brink with a 2.3 and while low it diffused the 
-3.1 numbers from last month. The shipments component 
jumped to 10.6 from -3.3 last month. These numbers tend 
to be volatile but they have been closely watched for 
signs of a second dip in our future. 

The immediate and unconditional return of the inspectors 
to Iraq now has a date. An "advance" party is scheduled 
to arrive on October-15th to "continue" discussions about 
the rules of what and where the inspectors can go with
their unconditional access. UN authorities said it could
be as much as two months before Iraq will let the full
inspection team go to work. That should be plenty of time
to hide anything of value don't you think? My idea of
unconditional would be "open it or lose it". Anything on
the list of prohibited sites becomes rubble the following
night.

Where to from here? With 2.2 negative warnings for every 
positive preannouncement the outlook is not good. The
positive news from QCOM and JBL after the close was nice
but not of a broad market nature. The futures spiked but
then they were very oversold at the close. The VIX is
nearing 50 again and the TRIN was near 2.0. The put/call
ratio has spent more time over 1.0 this week than I can
remember in quite some time. The volume continued to 
increase as traders ran to the exits. I have not mentioned
capitulation for a couple weeks. With the down volume
running nearly 10:1 to up volume for only the second time
in two months it appears that capitulation is drawing
near. The good news tonight is not likely going to change
the overall trend but we could see a bounce at the open 
without any negative overnight news. 

I was surprised today that we did not see a Fed bounce at 
the close. With the Fed meeting next Tuesday and chances
increasing for a rate cut, I expected the bulls to be 
mounting a much stronger "buy the rumor" attack. That
possibility still exists for Friday along with short 
covering from the weeks -369 Dow and -75 point Nasdaq 
drops. With a Fed meeting only two days away the shorts
should want to go into the weekend flat. 

Dow 8000 was a significant support point. Coupled with the
OEX at 428 and the SPX at 850 the breakdown today was a 
significant event. This almost guarantees a complete
retest of the July 7532 intraday lows. Before we see 
those lows again we have to get by the Fed meeting. I
doubt they will cut rates but bears will not want to be
short in case they do. Sellers will want to wait for the
meeting to sell in hopes of a bounce on a cut announcement. 
Either way it spells the possibility of an uptrend until 
2:PM on Tuesday. 
 
Enter Very Passively, Exit Very Aggressively!

Jim Brown

Check out the Traders Corner "Charting Trendlines" by
Leigh Stevens in tonight's newsletter.  
http://www.optioninvestor.com/indexes/traderscorner.asp


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

Citigroup Inc - C - close: 27.65 change: -1.46 stop: 28.61

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

Why We Like It:
The broader financial sector is not having a good week.  Shares 
of J.P. Morgan were hammered on Wednesday after the company 
announced an earnings warning.  Seems that the second-largest 
U.S. bank is seeing billions in bad loans related to bankruptcies 
in the telecom and energy sectors.  The financial group has 
already been dragged lower over macroeconomic concerns.  Now that 
loan defaults related to the recent equity bubble are coming home 
to roost, investors can't bail out of banking stocks fast enough.  
JPM is trading near 7-year lows.  Today's action saw MWD give 
back more than 10% after the brokerage missed earnings estimates 
by 12 cents.  AGE also reported disappointing earnings, citing 
weak investment banking results.  Citigroup, the largest U.S. 
bank, faced its own loan-related problems today after the company 
announced a $215 million settlement with the Federal Trade 
Commission.  This payout came in response to a lawsuit that 
claimed Associates First Capital (a Citi subsidiary) used 
deceptive marketing practices to persuade consumers with poor 
credit to purchase insurance policies on loans with high 
interest.  Citigroup already had egg on their face for the 
actions of its Solomon Smith Barney brokerage division (two 
words: Jack Grubman), and today's news provided more evidence 
that the company can't keep its own house in order.

As you might expect, Wall Street wasn't very pleased with this 
development.  C was hit for a 5.0% loss and tagged a new relative 
low on strong volume.  The daily bar chart shows that the stock 
has fallen below all recent levels of support.  Given the latest 
fundamental concerns, we do not think the bulls will be able to 
prevent a retest of the July lows.  This Dow component will also 
face more selling pressure if the Industrial-30 continues to 
tumble towards its own multi-year lows.  Our strategy for playing 
C is as follows: We'll enter this hypothetical short trade at 
current levels, with a stop at $28.61.  This is above both 
today's high and previous support on the 60-minute chart, which 
will hopefully now act as resistance.  Our profit-target will be 
set at $25.01, just above psychological support.  More aggressive 
traders could target a retest of the July low at $24.48.

Annotated Chart for C:


Picked on September 19th at $27.65
Results since picked:        +0.00
Earnings Date             10/16/02 (unconfirmed)
 




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

Lack of Support

by Steven Price

That was quick.  When the Dow broke through support at its 50% 
retracement of the rally between July 24 and August 22, it looked 
like 8000 would be the next stop.  I just didn't realize it would 
happen in two days.  I have renewed faith in my technical 
analysis education after watching a classic head and shoulders 
formation across all major indices.  The neckline break came at 
the same time as the 50% retracement support level fell and the 
result has been bloody.

IBM led the average down after its business rival EDS cut 
earnings estimates by more than 80%.  Big Blue finished the day 
down $4.75 to $64.80.  This was without a warning from IBM, which 
may be coming soon.

The Dow went tumbling early in the day, but appeared to find some 
support just over 8000.  It looked like we had found a new range, 
which was going to hold the group before re-testing its July 
lows.  That floor lasted only a few hours before late day selling 
pushed the group below 8000 to finish the day at 7942.39.  We are 
likely to slow down as we approach the July lows of 7532.66.  In 
fact, with the market sinking quickly, talk of a rate cut at next 
Tuesday's FOMC meeting will most likely lend some support.  Up 
until now, it appeared there was little chance the Fed would cut 
rates, as the market had rebounded throughout the last two months 
and looked like it had taken its best shot and held up.  Numerous 
Fed governors had indicated that rates were low enough to help an 
economic recovery.  The economy was growing slowly, but still 
growing.  Now that the market has sold off and much of the recent 
economic data has been weak, there may be speculation of a cut 
next Tuesday.  The talk of the Fed holding their bullets until 
after September 11, in case of another attack, is behind us, so 
the risk of lowering rates seems less than it was at the August 
meeting.   I still do not believe the Fed will lower rates next 
week, but expect to hear optimism creeping back in.  

Some of the reasons for today's sell-off, beside the EDS warning, 
came from economic data released this morning.  Jobless claims 
hit a four-month high, as rising layoffs have taken their toll.  
Housing starts were also off 2.2%, sending the homebuilders 
tumbling. The Dow Jones Home Construction Index (DJUSHB) lost 
over 7%, crashing through prior support and landing just above 
300.  

The  Philly Fed also reported that its monthly business survey 
had increased from -3.1 in August to 2.3 in September.  This was 
slightly below expectations and the bank said that although the 
indicators have recovered from negative readings, growth is 
sluggish in the region.  At least we are seeing positive growth, 
however, so there could be some bullish sentiment drawn from the 
report if you look hard enough.  The markets didn't like what 
they heard however, as the sell-off continued after the report 
was released.

A look at the bullish percentages shows just how severe the 
recent rollover has been.  The Dow has fallen from a recent high 
of 60%, which reflects the number of stocks in the average giving 
point and figure buy signals, to just 33%.  The Nasdaq 100 
(NDX.X) has dropped from 50% to 30%.  The S&P 500 has fallen from 
58% to 40%.  The NDX once again led the rollover, shifting into a 
column of "O"s before the others, so keep an eye on this index 
for the first signs of a rebound.

After the bell, Qualcomm actually released some good news, saying 
it expects fourth quarter shipments of mobile phone chips to 
increase from the expected 18 to 19 million to 20 million.  The 
company did not, however, increase earnings or sales targets.

I have been very bearish lately, predicting a re-test of 8000 in 
the Dow and 1200 in the Nasdaq.  Now that the Dow has broken this 
level and the Nasdaq has dropped to 1216.45, I am a little 
cautious about predicting another big drop tomorrow.  While I 
still think we may re-test July's lows, we are getting awfully 
close and we could see some slowing of the downward trend.  There 
is likely to be a bounce at some point soon, so I would keep 
stops on open short positions very tight to lock in any profits 
in the case of a bounce.  That bounce may provide a better entry 
point for shorts, as well.  Remember to trade what you see, and 
keep a few extra puts on hand just in case.







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

Market Averages

DJIA ($INDU)

52-week High: 10679
52-week Low :  7532
Current     :  7942

Moving Averages:
(Simple)

 10-dma: 8352
 50-dma: 8508
200-dma: 9603

S&P 500 ($SPX)

52-week High: 1176
52-week Low :  775
Current     :  843

Moving Averages:
(Simple)

 10-dma:  887
 50-dma:  895
200-dma: 1048

Nasdaq-100 ($NDX)

52-week High: 1734
52-week Low :  856
Current     :  866

Moving Averages:
(Simple)

 10-dma:  915
 50-dma:  950
200-dma: 1276


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


The Semiconductor Index (SOX.X): Just two days ago we said that 
250 looked like the next target in the SOX after breaking below 
support at 275. The average now sits at 252.  The mention of a 
new 52-week low seems redundant at this point, as it may just 
need to be a permanent headline to this update.  You have to go 
back to October 1998 to see the index this low.  Unless we see a 
rebound over 300, this will be the sixth straight red candle on 
the monthly chart.  Coincidentally this is also the sixth 
straight red candle on the daily chart.  We are probably in for 
some kind of bounce soon, although it is not likely to recover 
much of the recent losses.  Qualcomm's announcement after the 
bell that they are predicting higher cell phone chip shipments 
will probably give us that bounce tomorrow.  We are likely to 
hover over 250 for a few days, but if it breaks below that level, 
get out of the way, or just get short.

52-week High: 657
52-week Low : 252
Current     : 252

Moving Averages:
(Simple)

 10-dma: 278
 50-dma: 321
200-dma: 474

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

Market Volatility

On Tuesday we said to look for the VIX to creep into the mid 40s, 
and that we could see it back into the 50s if we re-test July's 
lows.  That appears to be happening before our eyes.  The VIX 
back up to 46 could be viewed as a contrarian indicator, as 
rallies generally follow spikes in the VIX.  However, with 
support in the Dow gone at 8300 and 8000, July's low of 7500 may 
be in the near future.  There is likely to be some sort of bounce 
before we reach that point, but a dip in the VIX may only be 
temporary on that bounce. 

CBOE Market Volatility Index (VIX) = 46.16 +5.27
Nasdaq-100 Volatility Index  (VXN) = 62.71 +3.38

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

          Put/Call Ratio  Call Volume   Put Volume

Total          1.23        547,243       674,433
Equity Only    1.04        359,372       375,434
OEX            1.14         56,842        64,001
QQQ            2.25         27,791        62,506

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

Bullish Percent Data

           Current   Change   Status
NYSE          38      - 4     Bull Correction
NASDAQ-100    29      - 6     Bull Correction
Dow Indust.   33      -10     Bull Correction
S&P 500       40      - 8     Bear Confirmed
S&P 100       35      - 9     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  1.75
10-Day Arms Index  1.46
21-Day Arms Index  1.51
55-Day Arms Index  1.32

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        576          2203
NASDAQ      922          2379

        New Highs      New Lows
NYSE         21              19
NASDAQ      209             280

        Volume (in millions)
NYSE     1,750
NASDAQ   1,511


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

Commitments Of Traders Report: 09/10/02

Weekly COT report discloses positions held by small specs
and commercial traders of index futures contracts at the 
Chicago Mercantile Exchange and Chicago Board of Trade. COT data 
can be found at www.cftc.gov.

Small specs are the general trading public with commercials being 
financial institutions. Commercials are historically on the 
correct side of future trend changes while small specs tend 
to be wrong.  

S&P 500

Commercials reduced long positions and added to shorts, 
reflecting an increase of almost 8,000 short contracts overall.  
Small traders increased both sides of the equation considerably, 
leaning long by an extra 3,000 contracts.


Commercials   Long      Short      Net     % Of OI 
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%)
09/10/02      426,230   470,537   (44,307)   (5.0%)

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
08/20/02      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%
09/10/02      166,696    85,259    81,437     32.3%

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 to both long and short positions, for a net 
reduction of 1,000 contracts to the short positions.  Small 
traders also added to both sides, netting out about the same as 
they finished the last period.


Commercials   Long      Short      Net     % of OI 
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%)
09/10/02       53,309     58,745    (5,436) ( 4.9%)

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
08/20/02       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%
09/10/02       14,024    10,494     3,530    14.4%

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 added slightly to both sides, leaving their long 
contract positions slightly higher by about 800 contracts.  Small 
traders beefed up both sides, with an extra 1,000 short contracts 
overall.  


Commercials   Long      Short      Net     % of OI
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%
09/10/02       22,946    14,936    8,010      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
08/20/02        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%)
09/10/02        7,568    10,129    (2,561)   (14.5%)

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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Do not duplicate or redistribute in any form.




PremierInvestor.net Newsletter                 Thursday 09-19-2002
                                                    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:  MXIM
  Closed Bullish Plays:  CTSH

Stock Bottom / Active Trader
  New Bearish Plays:     C, CI, KMB
  Bearish Play Updates:  AHC, AGN, BDK, CUM, DIA, DUK, GE, GM
  Closed Bearish Plays:  AEP

Split Trader
                         EASI: 3-for-2 split announcement

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

Maxim Integrated - MXIM - cls: 24.45 chg: -0.86 stop: 27.54 *new*

Semiconductor bulls are pounding the table for a short-covering 
rally.  The group is oversold, they say, and nothing goes down in 
a straight line.  We're not going to argue with that, but the 
sector will have a heckuva time rebounding if dismal IT news 
continues to surface on almost a daily basis.  Today's action saw 
the SOX.X reach another multi-year low after the earnings warning 
from EDS provided another excuse to dump tech stocks.  MXIM moved 
lower with the index and pegged a multi-year low of its own.  In 
another encouraging technical development, shares closed under 
psychological support at $25.00 after briefly spiking above that 
level on an intraday basis.  With this obstacle out of the way, 
the bears may be able to push MXIM down to the bottom of its 
descending channel near $20.00.  We've set an official profit-
target well above that level at $22.06.  This would be almost a 
20% gain from our entry point.  Also note that we've moved our 
stop down to $27.54, which is essentially break-even.  Those 
looking to protect a gain could use a stop just above yesterday's 
high of $25.77.  Aggressive traders still looking to get short 
could target new entries on a move below today's low of $24.32.

Picked on September 13th at $27.44
Gain since picked:           +2.99
Earnings Date             11/05/02 (unconfirmed)
 




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

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

Cognizant Tech. - CTSH - cls: 58.85 chg: -3.95 stop: 59.65

Last night's earnings warning from EDS had shares of CTSH trading 
in a negative fashion on Thursday morning.  The stock gapped 
lower and opened under the $60.00 level.  Our long play was 
closed for a loss of 2.8% at the opening trade of $59.65.  Shares 
may also have been pressured by news of a cash shortfall in 
Silverline, a company that Cognizant plans to purchase.  
Technically, today's action was not encouraging for the bulls.  
CTSH violated psychological support at $60.00 and triggered a 
double-bottom sell signal on the point-and-figure chart.  
Although the multi-month uptrend is still intact, the 
downtrending daily stochastics and bearish MACD crossover are 
hinting at a pullback to the $55-$57 region.  We would not 
recommend holding any bullish positions at this time.

Picked on September 9th at $61.40 
Results since picked:       -1.75
Earnings Date            07/15/02 (confirmed)
 





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

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

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

Citigroup Inc - C - close: 27.65 change: -1.46 stop: 28.61

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

Why We Like It:
The broader financial sector is not having a good week.  Shares 
of J.P. Morgan were hammered on Wednesday after the company 
announced an earnings warning.  Seems that the second-largest 
U.S. bank is seeing billions in bad loans related to bankruptcies 
in the telecom and energy sectors.  The financial group has 
already been dragged lower over macroeconomic concerns.  Now that 
loan defaults related to the recent equity bubble are coming home 
to roost, investors can't bail out of banking stocks fast enough.  
JPM is trading near 7-year lows.  Today's action saw MWD give 
back more than 10% after the brokerage missed earnings estimates 
by 12 cents.  AGE also reported disappointing earnings, citing 
weak investment banking results.  Citigroup, the largest U.S. 
bank, faced its own loan-related problems today after the company 
announced a $215 million settlement with the Federal Trade 
Commission.  This payout came in response to a lawsuit that 
claimed Associates First Capital (a Citi subsidiary) used 
deceptive marketing practices to persuade consumers with poor 
credit to purchase insurance policies on loans with high 
interest.  Citigroup already had egg on their face for the 
actions of its Solomon Smith Barney brokerage division (two 
words: Jack Grubman), and today's news provided more evidence 
that the company can't keep its own house in order.

As you might expect, Wall Street wasn't very pleased with this 
development.  C was hit for a 5.0% loss and tagged a new relative 
low on strong volume.  The daily bar chart shows that the stock 
has fallen below all recent levels of support.  Given the latest 
fundamental concerns, we do not think the bulls will be able to 
prevent a retest of the July lows.  This Dow component will also 
face more selling pressure if the Industrial-30 continues to 
tumble towards its own multi-year lows.  Our strategy for playing 
C is as follows: We'll enter this hypothetical short trade at 
current levels, with a stop at $28.61.  This is above both 
today's high and previous support on the 60-minute chart, which 
will hopefully now act as resistance.  Our profit-target will be 
set at $25.01, just above psychological support.  More aggressive 
traders could target a retest of the July low at $24.48.

Annotated Chart for C:


Picked on September 19th at $27.65
Results since picked:        +0.00
Earnings Date             10/16/02 (unconfirmed)
 



--- 

Cigna Corp. - CI - close: 75.31 change: -1.50 stop: *text*

Company Description:
CIGNA Corporation, headquartered in Philadelphia, and its 
subsidiaries constitute one of the largest publicly owned 
employee benefits organizations in the United States. Its 
subsidiaries are major providers of employee benefits offered 
through the workplace, including health care products and 
services; group life, accident and disability insurance; 
retirement products and services; and investment management. 
(source: company press release)

Why We Like It:
The overall insurance group is looking pretty weak.  Many had 
anticipated a post-9/11 relief rally, but this did not come to 
pass.  The IUX.X insurance index has been trending lower for 
nearly a month and is trading at fresh relative lows.  Further 
broader market negativity could have the IUX.X quickly moving to 
test its July lows near 220.  A glance at some of the larger 
players in the group shows that MET, ALL, LTR, and ABC are 
trading near relative lows.  However, we've chosen to pick on CI 
because of its recent negative news and weak technical 
characteristics.

Cigna started out the month of September on a bearish note after 
the company announced it would record a $720 million charge to 
hedge risk related to death benefit reinsurance contracts.  
Moody's reacted to this news by cutting CI's credit outlook from 
"stable" to "negative."  The rating agency based its downgrade on 
weak net income growth and declining shareholder equity levels.  
S&P and Fitch have also placed Cigna credit under review.  As 
negative as this sounds, the stock did not see an immediate sell-
off - shares spent the next two weeks bouncing in a small range 
near the $78.00 mark.  The bears finally got what they were 
looking for on Thursday, when CI broke down and closed under 
near-term support at $76.00.  This has set the stage of a test of 
the July low of $75.05.  Should this level fail, we believe CI 
will rapidly move towards its 2001 lows near $70.00.  Point-and-
figure chartists will note that a violation of the $75.00 level 
will create a spread-triple sell signal.  With this in mind, 
we're going to place this play's action point at $74.98.  If 
triggered, our stop-loss will be set at $76.52.  This is two 
cents above today's high.  Those who are willing to give CI more 
breathing room could use a stop just above yesterday's high of 
$77.39.  Our profit-target will be set at $70.06.  An eventual 
decline to the $60-$65 region wouldn't be out of the question of 
the insurance group sees heavier selling, but for our shorter-
term purposes we'll be satisfied with a hypothetical 6.5% profit.

Annotated Chart for CI:


Picked on September xxth at xx.xx
Results since picked:       +0.00
Earnings Date            11/01/02 (unconfirmed)
 



--- 

Kimberly Clark - KMB - close: 57.01 change: -0.63 stop: *text*

Company Description:
Kimberly-Clark Corporation is a leading global consumer products 
company. Its tissue, personal care and health care products are 
manufactured in 42 countries and sold in more than 150. Kimberly-
Clark is home to some of the world's most trusted and recognized 
brands, including Kleenex, Scott, Huggies, Pull-Ups, Kotex and 
Depend. (source: company press release)

Why We Like It:
The FPP.X forest/paper products index was ripped to shreds after 
it gave a triple-bottom sell signal earlier this month.  The 
latest broader market decline has really taken its toll on the 
group.  Last week's rollover from 300 led to a heavy sell-off 
that's taken the FPP below its 2001 lows.  Sector leader IP has 
led the decline, along with similar breakdowns in BCC in WY.  KMB 
isn't yet trading at 52-week lows, but it may only be a matter of 
time before shareholders suffer that fate.  

After rebounding from its July lows, the stock spent more than 
six weeks trading in a narrow range between $58.00-$61.50.  
Slapping a retracement bracket from the May high ($66.79) to July 
low ($52.45) shows that this range was dictated by the 61% and 
38% fibonacci levels.  Perhaps market makers were using this as a 
way to manage risk.  The recent breakdown below support at $58.00 
(and the 50-dma at $58.61) suggests that institutional traders 
now have a sell-side bias.  With no immediate underlying support 
levels, KMB could be on a crash course with its July low at 
$52.45.  As far as this play is concerned, we'll target a move to 
our exit target at $52.51.  Although the daily stochastics have 
already reached oversold levels, the recent breakdown, rolling 
MACD, and overall sector weakness are indications that the stock 
has more downside potential.  Longer-term traders can also be 
encouraged by the falling weekly stochastics.  In order to ensure 
that shares have broken to new relative lows, we won't activate 
this play until KMB trades at or below $56.85.  Our stop-loss 
will be set at $58.63, just above the 50-dma.  More conservative 
traders could use a stop just above yesterday's high of $58.24.

Annotated Chart on KMB:


Picked on September xxth at xx.xx
Results since picked:       +0.00
Earnings Date            10/22/02 (unconfirmed)
 




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

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

Allergan - AGN - close: 52.04 change: -0.36 stop: 54.01 *new*

Not much has changed for shares of AGN since Tuesday.  The stock 
continues to trade in a very narrow descending channel.  It would 
appear that traders are using the 5-dma to put pressure on the 
issue.  We're a little surprised at AGN's strength considering 
the big drop in the markets today.  Of course drug stocks have 
been seen as defensive plays for years and it can be a hard habit 
to break for some investors.  The intraday chart looks like it's 
pointing to more weakness tomorrow but we probably wouldn't 
initiate new positions unless you were an aggressive trader with 
a tight stop.  Speaking of stops, we're going to tighten ours to 
$54.01 but conservative traders could even use yesterday's high 
to really protect themselves.  Our profit target of $50.00 
remains but Kent continues to suggest a slight higher exit point 
(in the $50.06 to $50.11 area).

Picked on September 11th at $54.69
Results since picked:        +2.65
Earnings Date             10/24/02 (confirmed)




---

Amerada Hess Corp - AHC - cls: 65.89 chg: -1.92 stop: 70.01*new*

Hmmm... no new news but shares of AHC continue to slip despite 
the price of crude hovering just under the $30/barrel level.  The 
rate of descent is picking up speed and so is the volume for AHC.  
Technically some of the oscillators are reaching oversold but the 
slow line in the MACD just crossed the zero line and the 
histogram is picking up speed.  Our target range of $62 to $63 is 
looking more reasonable.  Bears looking for new positions might 
be cautious as the stock approaches the $65 level.  This could be 
short-term support but we don't expect it to hold.  That doesn't 
mean the stock can't bounce from here for a day or two before 
continuing its descent.  At this point we'd probably prefer a 
failed rally at $68 or a move under $65 even though the intraday 
chart is looking very weak for AHC.  Use your best judgement.  
We're going to lower our stop to $70.01 for now but more 
conservative traders can probably get by with something tighter.  

Picked on September 17th at $68.02
Results since picked:        +2.13
Earnings Date             07/24/02 (confirmed)
 



---

Black & Decker - BDK - close: 40.71 change: -1.01 stop: 44.33

If you missed the Wednesday edition of the newsletter we were 
triggered in our bearish play for BDK.  Shares confirmed the 
breakdown from Tuesday after closing below the $42 level.  Now 
that the Head-and-Shoulder's pattern neckline is broken we just 
need to sit back and let the negative market environment do the 
work for us.  The intraday chart for BDK looks pretty 
discouraging and we can't imagine why investors would want to buy 
the stock at this time when they might get a better deal at $36.  
The play looks fine for new entries at this time but more 
conservative traders might want to wait for shares to break the 
$40 mark.  Plus, you could use a tighter stop just above the 
previous support level of $43.00 to reduce risk.  The Premier 
newsletter will leave our stop at 44.33 for the night and re-
evaluate after Friday's close.  PnF chart readers might want to 
keep an eye on BDK's PnF chart.  Currently it is fighting with 
bullish support and it looks like it's about to break through it.

Picked on September 18th at $41.69 
Results since picked:        +0.98
Earnings Date             10/22/02 (unconfirmed)
 



---

Cummins Inc - CUM - close: 24.59 change: -0.62 stop: 26.76

Our bearish play in shares of CUM is working well.  When the 
stock broke to new 10-year lows on Tuesday it appears that some 
traders have called it quits and threw in the towel (or their 
stops were hit).  Volume has been very high the last two sessions 
for CUM.  The breakdown under the $25 psychological round number 
is very bearish and shares closed at their low for the day - 
another bearish sign for tomorrow.  Very short-term traders might 
want to consider getting out of the play tomorrow on additional 
weakness.  However, we continue to look for a move to the $22.50 
level or lower.  Just remember that nothing moves in a straight 
line and CUM is due for a bounce despite the negative price 
action.  All the technical indicators are in oversold territory 
but that doesn't mean that can't get more oversold.  Those 
traders who really feel bearish for the sector or equity can take 
comfort in the PnF vertical count for CUM.  The bearish target is 
pointing to a price level of $12.00.  We lowered our stop to 
$26.76 in Wednesday's newsletter and we plan to leave it there 
for the moment.  More conservative traders can probably use a 
tighter stop.

Picked on September 17th at $26.99 
Results since picked:        +2.40
Earnings Date             10/10/02 (unconfirmed)
 



---

Diamonds Trust - DIA - cls: 79.64 chg: -1.78 stop: 83.01*new*

Ouch! The stream of negative earnings news continues to flow and 
rising war rhetoric from the White House may have investors here 
and abroad believing military action is closer than we think.  
The close under the 8K mark for the Dow Industrials today was a 
big no-no for the bulls and a retest of the July lows is looking 
stronger and stronger.  We're lowering our stop to $83.01 while 
we continue to target the $76.26 level (and we'll exit should the 
Diamonds trade there).  New entries might be considered with the 
negative technical development BUT keep in mind that the market 
could trade sideways to slightly higher the next day or two while 
we wait to see if the FOMC will cut rates on Tuesday.  If they 
will or if they won't we're still looking for lower numbers next 
week.

Picked on September 18th at $81.41
Change since picked:         +1.77
Earnings Date                  N/A
 



---

Duke Energy - DUK - close: 21.42 change: -1.20 stop: 23.26*new*

Astute readers will note that while we have dropped AEP as a 
short play we have elected to keep DUK on the list.  Both are 
electric utilities but DUK is looking much weaker.  The stock 
remains in its relatively tight descending channel and 
Wednesday's rebound was quickly erased by today's trading action.  
The entire group has been hamstrung by bad credit and liquidity 
issues throughout the industry and trading activity has dropped 
dramatically since the demise of Enron.  DUK may have one of the 
best credit ratings in the business but today the company 
confirmed it will be cutting staff throughout its operations.  
This may be a wise business decision but investors may see it as 
a worrisome sign that conditions are not improving.  The Premier 
research team is still aiming for a move to the $18.50 to $20.00 
range and we're leaning to the latter as our profit target for 
now.  While we wait and see how shares fare heading into the 
weekend we will lower our stop to $23.26.  This is above 
yesterday's high and above the current 10-dma.  If the current 
trading channel prevails, DUK could see a drop to the $20.50 area 
before bouncing higher again.  Those short-term traders looking 
to beat the crowd to the exits might consider using this level as 
your own profit target.  Premier is currently up about 9.7% on 
this selection.

Picked on September 11th at $23.74 
Results since picked:        +2.32
Earnings                  10/15/02 (unconfirmed)




---

General Electric - GE - cls: 26.55 chg: -0.80 stop: 29.01 *new*

We were not disappointed with GE's performance the last couple of 
sessions.  After failing at $29.00 on Tuesday the stock has 
failed again at $28.00 Wednesday afternoon and now shares have 
lost the $27.00 level of recent support.  The intraday chart 
(take your pick) looks rather bearish with shares closing at 
their lows for the day.  The constant undertow by the $INDU and 
the string of Dow component earnings warnings isn't giving 
investors any reason to buy and there could be a growing concern 
that even GE might not be able to make their numbers.  There is 
already talk among analysts that GE's string of double-digit 
earnings growth years may come to an end rather quickly.  With 
the $INDU under the 8K mark our short-term target of $25 seems 
much more reasonable than earlier this week.  If you believe the 
market will retest its July lows then GE might be able to trade 
even lower.  We're going to lower our stop to $29.01 just to 
reduce our risk.  If shares of GE actually close above $28 again 
we'll probably consider closing the play.

Picked on September 13th at $27.65 
Results since picked:        +1.10
Earnings Date             07/12/02 (confirmed)




---

General Motors - GM - cls: 42.45 chg: -1.29 stop: 45.01 *new*

It looks like the bearish trend in GM is picking up steam.  There 
have been some interesting news pieces for the company recently.  
On Wednesday the company said it expects U.S. vehicle sales to 
slow in September.  GM admitted that its own sales might be lower 
since they have essentially sold out of their 2002 models due to 
their 0% financing offers.  Later in the day Lehman Brothers 
restarted coverage on GM and Ford.  F got an under-weighting and 
GM received an equal-weighting.  Why can't they just make it 
simple like we'd sell Ford here because of their weak product 
line and we'd keep GM if we owned it but we're really not looking 
to initiate new positions at this time?  Advance to today's 
session and shares sold off almost 3% on the news and the company 
also receive more brokerage comments.  This time from Prudential.  
Prudential also slapped Ford with a lower price target (from $12 
to $9) and reiterated similar comments from Lehman about Ford's 
weaker product line up.  The PRU analyst did raise earnings 
estimates for GM probably due to higher market share but they did 
not elaborate.  The close today under the $42.50 mark is 
encouraging for the bears but the stock is quickly approaching 
the July lows near $40.50.  Short-term traders should decide now 
at what point they are willing to cover for a profit.  Will you 
be happy to cover at $41.00?  $40.50?  or are you shooting for 
$40 or below?  The stock is moving in our favor so we're going to 
drop our stop loss down to $45.01 to reduce our risk.  

Picked on September 16th at $43.89 
Results since picked:        +1.44
Earnings Date             10/15/02 (confirmed)
 




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

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

American Electric Pwr. - AEP - cls: 29.25 chg: -0.21 stop: 31.01

We realize it's only been four days but we've decided to cut AEP 
loose from our stable of non-tech short plays.  The descent has 
slowed somewhat and believe it or not some of the electric 
utilities are actually attempting to rally.  Bears need not fear 
too much though.  The downtrend for AEP is still in effect and 
the intraday chart today shows a nice failed rally at the $30 
level of resistance for AEP.  The danger for technical traders is 
that all the oversold indicators are beginning to look bullish.  
A break above the $30 mark could set up shares of AEP to trade to 
recent support near $32 (now resistance), which also coincides 
with the 50-dma near $32 (also resistance).  Those traders not 
willing to give up on the play can leave it open or tighten their 
stop.  We are closing the play with a paper loss of 27 cents.

Picked on September 13th at $28.98
Results since picked:        -0.27
Earnings Date             07/25/02 (confirmed)





==================================================================
Split Trader (ST) section
==================================================================

Split Announcements
-------------------

EASI Engineers 3-for-2 Stock Split

Shortly after the closing bell today, Engineered Support Systems, 
Inc. (NASDAQ: EASI) announced that its Board of Directors had 
authorized a 3-for-2 stock split.

The split will be distributed on October 31, 2002 to shareholders 
of record on October 4, 2002.

Engineered Support Systems last split its stock in March 2001.  
Sharply contrasting the NASDAQ, shares have been uptrending for 
more than eight months.  This relative strength can be attributed 
to the fact that EASI is a defense contractor.  The past three 
weeks have seen the stock move sharply higher as the White House 
presses for war with Iraq.

Shares closed at $56.83 on Thursday.  For a current quote, click here:

http://user.financialcontent.com/pin1/quote.cgi?account=pin1&ticker=EASI

About the company
Engineered Support Systems, Inc. is a diversified supplier of 
high-tech, integrated military electronics, support equipment, and 
logistics services for all branches of America's armed forces and 
certain foreign militaries. (source: company press release)


==================
  Trading Ideas
==================

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

Value Plays With Bullish Signals 
--------------------------------- 
Ticker  Company Name               Close     Change 

RMCI    Right Mgmt Consultants     25.10     +0.80

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

MLHR    Herman Miller Inc         17.37     +2.40
DBRN    Dress Barn Inc            15.25     +3.96

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

FDX     Fedex Corp                 47.76     +4.96
GPN     Global Payments Inc        25.67     +2.57
FNFG    First Niagara Financial    30.69     +1.44

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

IBM     Intl Business Machines     64.80     -4.75
GSK     GlaxoSmithKline Plc ADR    35.18     -2.39
WB      Wachovia Corp              32.14     -1.99
MWD     Morgan Stanley             33.90     -4.20
BCS     Barclays Plc ADR           24.60     -1.20
AMGN    Amgen Inc                  42.01     -3.47
SLB     Schlumberger Ltd           39.36     -1.95
FDC     First Data Corp            31.09     -1.44
DB      Deutsche Bank Ag           50.52     -5.18
MFC     Manulife Financial         20.61     -1.01
RIG     Transocean Inc             20.35     -1.36
NYT     New York Times Co          45.08     -2.72
MAR     Marriott Intl Inc          28.51     -1.99
CX      Cemex Sa De Cv ADS         20.88     -1.20
CSC     Computer Sciences Corp     29.50     -5.66

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

SYY     Sysco Corp                 29.19     -1.11
LEN     Lennar Corp                53.40     -3.25
CTSH    Cognizant Tech             58.83     -3.97
ZLC     Zales Corp                 30.67     -0.83




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