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Daily Newsletter, Tuesday, 10/01/2002

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PremierInvestor.net Newsletter                  Tuesday 10-01-2002
                                                    section 1 of 2
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In section one:

Market Wrap:      Unbelievable!
Play-of-the-Day:  Even Mothers Need Rest
Market Sentiment: Balancing Act


************************************************************
MARKET WRAP  (view in courier font for table alignment)
************************************************************
      10-01-2002           High     Low     Volume Advance/Decline
DJIA     7938.79 +346.90  7940.59  7593.04 2.03 bln   2200/1009
NASDAQ   1213.72 + 41.70  1214.01  1160.71 1.67 bln   1881/1525
S&P 100   425.74 + 18.49   425.74   406.57   Totals   4081/2634 
S&P 500   847.91 + 32.63   847.93   812.82 
RUS 2000  368.09 +  5.82   368.09   357.15 
DJ TRANS 2225.18 + 74.10  2225.18  2138.98   
VIX        40.13 -  4.44    45.32    39.77   
VXN        57.24 -  1.11    62.01    57.07
Total Vol   3,947M
Total UpVol 3,008M
Total DnVol   850M
52wk Highs   150 
52wk Lows    538
TRIN        0.61
PUT/CALL    0.87
*************************************************************

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

Unbelievable!

The markets started off slow but finished with a bang. The Dow
opened marginally positive and traded sideways until 12:15 and 
then exploded on the Iraq headlines. Actually exploded is the
wrong term, it was more like built into a bonfire after being
started by a smoldering cigarette. The biggest winners were the 
big caps as the safest ports in a storm. The overall take is 
one day does not an October make. 

Dow Chart



Nasdaq Chart



Everybody has heard the adage. Toss a frog in boiling water and 
he will jump out. Put it in a pan of cold water and turn up the 
heat and it will not jump and be boiled alive. I have never tried
this but it is exactly how many investors felt after the close. 
The markets smoldered with an underlying bid and a slow building
of higher lows until about 12:15. Shorts were starting to get 
uneasy as the Dow moved from 7600 to 7700 but after multiple
attempts at that level most expected just another failed attempt
and a roll over into an October decline. 

Just before 1:PM the 7700 gate broke but it did so slowly with a
steady move into the close. The move had a couple plateaus about
50 points apart which worked to convince bears that the momentum
move was over. Thus stops got nudged again and again and shorts
found themselves looking at a +300 point Dow and wondering how
the water got so hot. 

The reasoning given for the bounce was the Iraq news but it 
was squashed several minutes after the announcement as nothing
new. Still with news channels reporting it over and over I 
could see where some retail traders would decide to bail out
or some positions. In reality I believe it was the lack of 
major earnings warnings that sparked the market. Two days 
without bad news makes bears weak. We also saw some asset 
allocation in progress. Add the positive ISM numbers and 
suddenly the bulls are thinking rally. 

Did I say "positive" ISM numbers? The headline number fell below
expectations for the third consecutive month and fell below 50
to 49.5. This indicates a shrinking economy instead of a growing
economy. Had it been a stand alone number we would likely be 
much lower tonight. Instead there were some signs of progress
in the internal numbers. New orders rose to 50.2 from 49.7
last month. Deliveries increased from 53.4 to 55.7. Inventories
fell from 45.2 to 43.6. After seven months of growth the
economy is falling back into recession but only very slightly
as indicated by the internals. The key number dragging down
the average was production which fell to 50.9 from 55.9 last
month. Despite the small decline in the headline number the
last three months have been basically flat with an average of
50.1. Definitely not expanding but bulls are claiming no
decline either. More on this later.

Chain Store sales fell again -0.8% for the week ended 9/21.
Year over year growth fell to only +2.0% from +3.7% in early
September. Most chain stores, including the discounters have
warned of falling sales and decreasing consumer traffic for
the last four weeks. The back to school season was miserable
and according to current surveys the holiday season will also
be miserable. One survey showed 57% of consumers were planning
to spend less money this year than last. When you consider 
that the periods now being compared against were the weeks
immediately after the 9/11 attack when retail was almost zero
you can see how bad these numbers really are. There is really
an implied decline when you consider that year ago period.
We also have the dock strike/lock out on the west coast. 
The news reporters have been quick to point out multiple
times a day that it is costing the U.S. $1 billion a day
in lost GDP. Whether it is true or not the 3Q GDP is only
estimated to be $29 billion. Take a few billion off here
and there and suddenly you have a real recession. I happen
to believe the goods on the ships will be delivered in time
for the holidays but nobody will be there to buy them anyway.

Zero percent is generating zero interest. Auto sales dropped
to an annual rate of 16.3 million units from 18.7 million
units last month. With zero percent interest for up to five
years, added sales incentives and a new model year the pace 
of sales still slowed. This suggests that those who wanted
to buy a car already have and we could be slamming up against
the slow holiday season with higher inventories and no buyers.
GM sales fell sharply from 5.5 million to 4.1 million units. 
They had been leading the league in performance and now led
in the sales drop.

Construction Spending fell -0.4% and posted the fourth 
consecutive month of decline. Commercial spending fell the 
hardest at -2.0% with office construction down -4.6%. This
puts commercial spending down -18.6% from last years levels. 
New residential construction is also slowing with single
family dropping -0.7% and the third monthly drop. With
the commercial and residential construction drop accelerating
it is evident that the economy is moving into rougher times. 
At least evident to me. 

Good news today came in the slower pace of layoffs for September.
The Challenger report showed only -70,057 workers laid off 
compared to -118,000 in August. While the rate of layoff is
decreasing there is still no hiring. Businesses are down to 
the bare bones staff and would be hard pressed to keep up the
layoff pace of -100K a month that was posted in early 2002. 
However, remember there have been several high profile cuts
announced over the last couple weeks for execution in the 4Q.

The TV networks announced that they were nearly sold out of 
advertising space for the 4Q. They said there was a pickup 
in bookings led by the automobile companies and chain stores
and that prices paid were up from the 3Q bookings. I guess 
you know what that means. Those of us that are not planning 
to buy cars or low rider jeans will have to sit though 
thousands of commercials trying to change our minds before
the holidays. I am sure Bowflex and FitnessMadeSimple.com 
will be high on the cable list as well. 

The market soared +346 points but forecasts collapsed. Abbey
Joseph Cohen ranks up at the top of the perma bulls with a
12 month estimate for the S&P of 1300. Tom McManus of BAC cut
his 12 month estimates to 1000. Those are the optimistic ones. 
Merril Lynch lowered their estimates today to a target of 860 
for the S&P in 12 months. Richard Bernstein said the valuation
had improved on falling interest rates but earnings still
ruled and expected returns were still too high. JP Morgan
cut S&P estimates to 800 on the same outlook that earnings
were going to be weak. They said PE contraction was still
likely as the earnings backdrop remained weak and there were
few signs of a sustained recovery. Considering the S&P closed
Tuesday at 847, three of those four estimates don't project
a rosy picture for the next year. 

After the close Dell raised guidance for the quarter. NOT!
It was widely reported that Dell had raised guidance and 
was highly optimistic about the current quarter. I hate to 
be the wet blanket but their previous guidance was for $.20
to $.21 cents and analyst's estimates were for $.21 cents. 
Dell "raised" their guidance to the high end of their range
on the basis of increased cost cutting efforts and slightly
higher sales. This higher end of the range was $.21 cents
and exactly inline with analyst's estimates. They did raise
revenue estimates to $9.1 billion from the $8.9 billion that
analyst's had expected. They said broad-based momentum across
their product line from increased market share was feeding
the gains. Dell spun the press release very well and rose
more than $1 in after hours. The Nasdaq futures jumped 
as well but fell back to the flat line after the facts 
were assimilated. 

So what happened today? The general consensus was an asset
allocation program. If you remember last week I mentioned
that we could see some asset allocation programs at the
end of the quarter. This happens when the ratio of stocks
to bonds becomes lopsided compared to stated goals of 
mutual funds and pension plans. With bonds at decade highs
and stock markets at 4-6 year lows the possibility of a
weighting mismatch is almost guaranteed if you don't have
an actively managed fund. Periodically funds rebalance their
portfolios by reallocating their assets. With the two-year
note trading at 1.69% yesterday and below the Fed funds
target rate of 1.75% something had to give. The yield on 
the ten-year note jumped +0.78 today and in bond terms that
is a month of movement. There was heavy selling and that
money was put to work in stocks. What triggered the selling
in the bonds was the announcement by FNM that their duration
spread had narrowed from 14 months to 10 and this was without
massive buying of 10-year treasuries. It had been widely
rumored that they would have to buy up to $100 billion in
treasuries to narrow the gap. This was having a strong impact
in holding up the treasuries because nobody wanted to sell
if they were going to have to close this gap in the open
market.

The majority of the gains today were in the big caps. The
Dow was up +4.56%, the OEX +4.54%, SPX +4.0%. The Russell 2000
only gained +1.60%. Typically after major market bottoms the
small caps are the leading index not the big caps. Traders
on the floor of the NYSE this morning were expecting only 
a +50 to +80 point day and then another roll over. This was
exactly what I was expecting as well. Obviously there were
a lot of traders caught off guard and those traders had to
cover in disbelief as the afternoon wore on. I suspect the
asset allocation triggered the short squeeze but then the
squeeze fed upon itself in the closing minutes. 

Tomorrow will be interesting. The Dell news after the close
spiked the futures to strongly positive and ran the QQQ up
to $22.00. After the realization that Dell really was not
making that big of a guidance change we could see some of the
excitement wane. Normally a big move like we saw on Tuesday
is met with profit taking the day after. We are in October
and this is a month known for market bottoms. There are no
economic reports and the markets will be left to trade on 
stock news alone. Burlington Northern warned after the close
but nothing else of merit. This means there is no evident
direction but we could be heavy after today's gains. 

Enter Very Passively, Exit Very Aggressively!

Jim Brown



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

Mothers Work, Inc. - MWRK - cls: 34.27 chg: -3.76 stop: 36.11

Company Description:
Mothers Work is the world's largest designer and retailer of 
maternity apparel, using its custom TrendTrack(TM) merchandise 
analysis and planning system as well as its quick response 
replenishment process to "give the customer what she wants, when 
she wants it." Mothers Work operates 902 maternity locations, 
including 756 stores and 146 leased departments, predominantly 
under the tradenames Motherhood Maternity®, A Pea in the Pod®, 
and Mimi Maternity® and sells on the web through its 
maternitymall.com and brand-specific websites. (source: company 
press release)

Why We Like It:
It's tough to pick on a company named "Mothers Work" but everyone 
knows that even mothers need to rest sometimes.  This stock looks 
like it could use a rest.  The stock has been a huge winner this 
year.  The ride began in March as the stock took off from the $11 
range and traded as high as $40 multiple times through June and 
July.  Unfortunately, the stock could not break this resistance 
level.  The mid-July market decline took the stock down to $26 
but soon the bulls were at it again driving the price back 
towards $40.  Shares didn't quite make it before selling hit the 
stock again.  It looks like those investors who bought it near 
$40 were happy for the chance to get most of their money back and 
began to unload some stock.  The company is not without its good 
news and that's what drove the price up in the first place.  In 
the land of retail, Wall Street has been blindsided by some 
rather disappointing numbers and earnings reductions by some big 
names in the business.  In contrast, MWRK has actually been 
posting strong same store sales.  

What's intriguing is the sharp decline during today's session.  
The stock lost 9.8% or $3.76, falling below the $36 and $35 
levels of support.  Volume was huge at 178K shares compared to 
the daily average of just 67K.  Regular readers should take note.  
Normally, we don't trade stocks with such low average daily 
volume but we're making an exception due to the stock's over 
extended nature.  What makes today's decline even more 
interesting is not only was it fueled by big volume, we could not 
see any news and this was on top of huge market rally.  Shares 
did bounce at its 50-dma but we suspect more selling in the 
future.  

Our strategy will be the following.  We'll use a trigger point to 
go short under today's low of $33.50 - or $33.49 will be the 
trigger.  If and when we get filled our short-term target will be 
the $26.00 area but we'll actually post our official exit price 
now of $26.60 to beat the rush.  Our initial stop loss will be 
$36.11 but we'll quickly move it lower should shares continue to 
drop.  We do suspect that the $30 level might put up some support 
but tax loss selling by mutual funds looking to sell some winners 
to off set their lowers could really weigh heavily on this stock 
in October (when most funds have their year end).

Annotated Chart - MWRK




Picked on October xxth at $xx.xx
Results since picked:      +0.00
Earnings Date           07/15/02 (confirmed)
 




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

Balancing Act

by Steven Price

Do you believe?  Does it matter?  The Dow rebounded 346.86 points 
today to close at 7938.79.  Much of the rally was credited to the 
agreement between Iraq and weapons inspectors on where the 
inspectors would be allowed in the country.  While the specter of 
war seems to be on hold for the moment, oil futures remained 
high, due to fears that Hurricane Lili will disrupt oil 
production in the Gulf of Mexico.  December Crude Oil Futures 
stayed over $30 per barrel, finishing the day at $30.33 (+0.06).

The fact that the Dow rally fell short of 8000 still maintains 
the series of lower highs and lower lows since the index rolled 
over on August 23 breaking back below 9000.  I'll reiterate my 
earlier point that even a bear market rally can last a few 
hundred points, after a 1500-point drop.  8000 served as 
resistance last Thursday, as well, before we hit a new recent 
intraday low of 7460.78 on Monday.  This low was below the 
intraday low on the morning of July 24 (7532.66), and any rally 
that does not break the trend can be assumed to be temporary.  
What would change my mind?  A break in the trend.  The September 
3 low of 8304.44 was the first signal that the Dow's August rally 
was ending, as it constituted the first lower low since July 24. 
The rally on September 11, that led to a high of 8726.90, before 
sinking lower the next few days, constituted a lower high, as 
well, and confirmed the trend break and the fact that we were 
heading lower.  A close above 8000 would be a break in the 
current downtrend, and could be the signal that we have finally 
found a bottom.  The other evidence for a bottom is that we have 
bounced around the 7500 level three times now.  

Some of the economic news this morning looked negative.  The ISM 
index fell to 49.5, indicating a contraction in manufacturing.  
Purchasing managers were concerned about energy prices and the 
possible impact of a war with Iraq.  Although the index came in 
below expectations, some of the internal numbers within the 
report actually were better than expected.  Construction spending 
also fell 0.4% in August.  On the positive side, the pace of 
layoffs also decreased.  Corporate job cuts fell to a 22-month 
low of 70,057 in September.  This was 40% below August's number 
of 118,067 and 72% lower than September 2001.

After the close, Dell gave the market a boost by increasing its 
third quarter revenue forecast.  It now predicts sales of $9.1 
billion, a $200 million increase from previous forecasts and 22% 
ahead of September 2001.  It also expects earnings to be at the 
high end of previous estimates.  This may give us the boost we 
need for the above mentioned trend reversal.  The concern from 
where I'm sitting is that CEO Michael Dell said the company was 
able to increase forecasts due to growth in products other than 
PCs, which still remain weak.  He cited storage systems and 
servers.  I'd be much more bullish if the increase was due to an 
upturn in PC demand.

Tomorrow should be pivotal, as we get another look at the 8000 
mark in the Dow.  A failure at this level will be bearish, while 
a close above the recent highs could lead to a trend reversal.  
We will still need to see an increase in business spending before 
a real rally is sustainable, but an intermediate rally may 
provide some good long opportunities in the short term. 




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

Market Averages

DJIA ($INDU)

52-week High: 10679
52-week Low :  7532
Current     :  7938

Moving Averages:
(Simple)

 10-dma: 7872
 50-dma: 8414
200-dma: 9518

S&P 500 ($SPX)

52-week High: 1176
52-week Low :  775
Current     :  847

Moving Averages:
(Simple)

 10-dma:  839
 50-dma:  886
200-dma: 1035

Nasdaq-100 ($NDX)

52-week High: 1734
52-week Low :  843
Current     :  870

Moving Averages:
(Simple)

 10-dma:  863
 50-dma:  928
200-dma: 1243


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


The Semiconductor Index (SOX.X): If the Nasdaq rally is for real, 
this group, which reflects both business spending and PC sales, 
will need to crack 250.  It came close today, finishing at 
249.90, but the fact that the rally fell short of this number can 
be seen as significant.  After Dell raised guidance after the 
close, we should see this level broken tomorrow, but just how 
long it can hold will be the question.  Dell attributed its 
higher revenues to areas outside PC demand, so the market may not 
react as strongly as it would if that were the case.  A close 
over 260 would break the current series of lower highs and lower 
lows, so if we break the 250 level, look for similar resistance 
at 260 to be broken before considering long plays in the group.

52-week High: 657
52-week Low : 236
Current     : 249

Moving Averages:
(Simple)

 10-dma: 247
 50-dma: 300
200-dma: 461


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

Market Volatility

The VIX took a steep dive today, losing almost 10% in one day.  
However, it remained above 40, which is still a high level, on a 
day when the Dow rallied over 300 points.  The Nasdaq Volatility 
only gave up a point, as well.  The fact that both of these 
numbers remain high shows that option traders have not yet bought 
into the rally.  This includes institutions that make a habit of 
selling large amounts of premium when they feel it is overvalued.  
Look for a VIX in the low 30s to indicate that market 
participants believe a rally will be long term.  

CBOE Market Volatility Index (VIX) = 40.13 -4.44
Nasdaq-100 Volatility Index  (VXN) = 57.24 –1.11

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

          Put/Call Ratio  Call Volume   Put Volume

Total          0.87        520,943       452,989
Equity Only    0.67        134,916       202,761
OEX            1.19         31,137        39,287
QQQ            0.46         39,103        27,308

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

Bullish Percent Data

           Current   Change   Status
NYSE          33      + 0     Bull Correction
NASDAQ-100    19      - 3     Bear Confirmed
Dow Indust.   10      - 7     Bull Correction
S&P 500       27      - 3     Bear Confirmed
S&P 100       20      - 5     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   1.31
10-Day Arms Index  1.44
21-Day Arms Index  1.48
55-Day Arms Index  1.35

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       1925           834
NASDAQ     1809          1439

        New Highs      New Lows
NYSE         51             112
NASDAQ       34             268

        Volume (in millions)
NYSE     1,994
NASDAQ   1,696


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

Commitments Of Traders Report: 09/24/02

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 and short positions, however ended up 
with a net 10,000 fewer short contracts.  Small traders reduced 
both positions, as well, but shortened up their net long 
positions by 14,000 contracts.


Commercials   Long      Short      Net     % Of OI 
09/03/02      431,755   468,529   (36,774)   (4.1%)
09/10/02      426,230   470,537   (44,307)   (5.0%)
09/17/02      476,224   503,268   (27,044)   (2.7%)
09/24/02      425,276   442,661   (17,385)   (2.0%)

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
09/03/02      158,262    80,130    78,132     32.8%
09/10/02      166,696    85,259    81,437     32.3%
09/17/02      182,243   116,377    64,866     21.7%
09/24/02      124,232    73,506    50,726     25.7%

Most bearish reading of the year:  36,513 - 5/01/01
Most bullish reading of the year: 114,510 - 3/26/02
 
NASDAQ-100

Commercials reduced long and short positions, but got decidedly 
shorter, by a total of 4700 contracts.  Small traders also 
reduced positions, however stayed close to flat overall.


Commercials   Long      Short      Net     % of OI 
09/03/02       46,712     53,287    (6,575) ( 6.6%)
09/10/02       53,309     58,745    (5,436) ( 4.9%)
09/17/02       72,522     75,815    (3,293) ( 2.2%)
09/24/02       46,637     54,613    (7,976) ( 7.9%)

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
09/03/02       11,150     7,720     3,430    18.2%
09/10/02       14,024    10,494     3,530    14.4%
09/17/02       15,288    14,142     1,146     3.9%
09/24/02       11,163     9,421     1,742     8.5%

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 positions dramatically on a percentage basis, 
but got longer overall, by 3200 contracts.  Small traders also 
reduced positions, but flipped from the long side to short 
overall.



Commercials   Long      Short      Net     % of OI
09/03/02       21,161    13,792    7,369      21.1%
09/10/02       22,946    14,936    8,010      21.1%
09/17/02       26,863    21,187    5,676      11.8%
09/24/02       18,951    10,074    8,877      30.6%

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
09/03/02        6,395     7,966    (1,571)   (10.9%)
09/10/02        7,568    10,129    (2,561)   (14.5%)
09/17/02       13,393    11,637     1,756      7.0%
09/24/02        7,939     9,453    (1,514)   ( 8.7%)

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                  Tuesday 10-01-2002
                                                    section 2 of 2
Copyright © 2002, All rights reserved.
Redistribution in any form is strictly prohibited.

The entire newsletter is best viewed in COURIER 10 for alignment
=================================================================

In section two:

Net Bulls
  Bullish Play Updates: INVN
  Bearish Play Updates: KLAC, MERQ
  Closed Bullish Plays: CTSH

Stock Bottom / Active Trader
  New Bearish Play:     MWRK
  Bullish Play Updates: CCU
  Bearish Play Updates: BLS, CVX, KMB
  Closed Bearish Plays: AL, JPM

High Risk/Reward
  Bearish Play Updates: BGEN, TSS

SplitTrader
  Split Run
  Bullish Play Updates: RMCI
  

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


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

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

  ---------------
  Bullish Updates
  ---------------

InVision Technologies - INVN - cls: 31.30 chg: -0.71 stop: 29.98

The INVN bulls probably feel like they missed the party.  The 
market reverses into rally mode (even if it's just for the day) and 
INVN totally fails to participate.  Checking the news, we don't see 
anything that might weigh on the stock.  So we check the defense 
sector indices (DFX.X & DFI.X).  Both have been weak recently but 
this is due to sharp declines in RTN and FLIR.  We speculate that 
the lack of movement in INVN is that traders were merely distracted 
by the rush of short-covering in every other sector today.  There 
really was no appearance of new selling pressure for INVN.  The 
stock merely got lost in the shuffle as Wall Street focused on 
those issues that had been beat down so heavily, compared to INVN 
that had been steadily climbing.  Since we don't expect the market-
wide bounce to last, traders might consider scoping out new bullish 
entries in INVN as it is currently near the bottom of its ascending 
channel.  As long as it remains above both the $30 mark and its 
200-dma, we don't have too much reason to worry.

Picked on September 23rd at $31.70
Results since picked:        -0.40
Earnings Date             10/23/02 (unconfirmed)





  ---------------
  Bearish Updates
  ---------------

KLA-Tencor - KLAC - close: 29.23 change: +1.29 stop: 30.61

We're either looking at an opportunity or a warning.  The 
semiconductor sector didn't drop that much on Monday since it was 
already so oversold.  In response, shares of KLAC traded mostly 
sideways yesterday.  The sharp market rebound, or short covering, 
we saw today produced a +4% move in the SOX and a similar move in 
KLAC.  The potential bad news for bears is the appearance of 
strength, or more correctly, a further lack of weakness in shares 
of KLAC for the last two sessions.  Will the weary bulls suddenly 
have hope that this is a bottom for the chips?  Is now a time to 
buy?  Could $28 be the new support for KLAC?  Probably not.  At 
least not yet.  The stock still has not broken its steady down 
trend.  The good news for the bears is the fact that on such a 
bullish day the stock could still not close above the $30 mark.  
This may change tomorrow and thus our caution on not initiating any 
new plays at this time.  More aggressive traders could see this as 
an opportunity to go short considering the relatively tight stop 
should limit their exposure.  At this point it would probably feel 
more comfortable to see KLAC trading back below the $28 level 
before starting any new bearish positions.  Our current stop at 
30.61 might be too tight for some traders but we'd rather get 
stopped out here and look to re-enter again later than fall pray to 
a true rally that could mysteriously appear.

Picked on September 27th at $28.06
Gain since picked:           -1.17
Earnings Date             10/22/02 (confirmed)




---

Mercury Interactive - MERQ - cls: 17.72 chg: +0.56 stop: 18.31*new*

Did you know that good bulls and bears always follow the boy scout 
motto?  What's that you say?  You don't remember the boy scout 
motto?  That's easy.  It's "be prepared".  If we had planned ahead 
we would have set a profitable exit price near the bottom of the 
narrow descending channel in MERQ.  Our initial write up did say we 
were targeting a move to the $15.00 area but without an official 
exit we can not claim any of the move today to the $15.15 low (that 
would have been more than 15%).  However, since we missed a 
potential profitable exit we're going to "be prepared" and seek to 
protect ourselves from an unacceptable loss.  The big intraday 
rebound has produced a potential bullish reversal candlestick 
pattern, called a hammer, on the daily chart for MERQ.  While we do 
not put much faith in the market rebound today other than the short 
covering it really is - this doesn't mean we can't see another 
bounce tomorrow.  Fortunately, shares of MERQ have not yet broken 
out of its short-term descending channel (just look at a 30-minute 
chart and you'll see it from mid-September through today).  The top 
of this channel should be resistance at or around the $18.25 area.  
We're going to reduce our risk to only 33 cents by placing our new 
stop at 18.31.  If MERQ trades above this level then we can step 
away and look for any potential new entries should the stock fail 
again at the $20 area.  Meanwhile by keep the play open we can see 
if there is any follow-through to the rally today.  More 
conservative traders may want to close their positions at the open 
and attempt to get out at breakeven.

Picked on September 30th at $17.98 
Gain since picked:           +0.26
Earnings Date             10/17/02 (confirmed)





===============
NB CLOSED PLAYS
===============

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

Cognizant Tech. - CTSH - cls: 55.24 chg: -2.23 stop: 54.89 

Could that be any more frustrating for bulls in CTSH?  The markets 
get killed on Monday and the stock holds up rather well.  Actually 
it maintained most of its gains from last week while the broader 
indices were diving.  Now the market rallies from oversold levels 
and traders pull money out of CTSH to play other issues.  The stock 
lost 3.88% on heavy volume today.  The good news for shareholders 
is that the longer-term up trend and support at the 100-dma is 
still intact.  The bad news for us is the early intraday weakness 
stopped us out at our newly raised stop loss of 54.89, placed this 
weekend.  In an attempt to reduce our risk we may have stopped 
ourselves out prematurely.  The only good thing we can see is that 
now that we're out of the play the sharp end-of-day weakness we see 
in CTSH won't worry us.  The Premier Investor newsletter will close 
the play with a 70 cent loss but keep CTSH in mind for a new 
potential long should the stock be able to hold the $54 level as 
support.  The PnF chart is also showing the stock working off its 
rising bullish support line but should this level break there is a 
lot of profit built up in this equity that could be seen as a 
target to lock in gains.  
 
Picked on September 26th at $55.59
Results since picked:        -0.70
Earnings Date             10/14/02 (unconfirmed)






=================================================================
AT Active Trader/Non-tech plays
=================================================================

===========
AT New Play
===========


  New Bearish Play
  ----------------

Mothers Work, Inc. - MWRK - cls: 34.27 chg: -3.76 stop: 36.11

Company Description:
Mothers Work is the world's largest designer and retailer of 
maternity apparel, using its custom TrendTrack(TM) merchandise 
analysis and planning system as well as its quick response 
replenishment process to "give the customer what she wants, when 
she wants it." Mothers Work operates 902 maternity locations, 
including 756 stores and 146 leased departments, predominantly 
under the tradenames Motherhood Maternity®, A Pea in the Pod®, 
and Mimi Maternity® and sells on the web through its 
maternitymall.com and brand-specific websites. (source: company 
press release)

Why We Like It:
It's tough to pick on a company named "Mothers Work" but everyone 
knows that even mothers need to rest sometimes.  This stock looks 
like it could use a rest.  The stock has been a huge winner this 
year.  The ride began in March as the stock took off from the $11 
range and traded as high as $40 multiple times through June and 
July.  Unfortunately, the stock could not break this resistance 
level.  The mid-July market decline took the stock down to $26 
but soon the bulls were at it again driving the price back 
towards $40.  Shares didn't quite make it before selling hit the 
stock again.  It looks like those investors who bought it near 
$40 were happy for the chance to get most of their money back and 
began to unload some stock.  The company is not without its good 
news and that's what drove the price up in the first place.  In 
the land of retail, Wall Street has been blindsided by some 
rather disappointing numbers and earnings reductions by some big 
names in the business.  In contrast, MWRK has actually been 
posting strong same store sales.  

What's intriguing is the sharp decline during today's session.  
The stock lost 9.8% or $3.76, falling below the $36 and $35 
levels of support.  Volume was huge at 178K shares compared to 
the daily average of just 67K.  Regular readers should take note.  
Normally, we don't trade stocks with such low average daily 
volume but we're making an exception due to the stock's over 
extended nature.  What makes today's decline even more 
interesting is not only was it fueled by big volume, we could not 
see any news and this was on top of huge market rally.  Shares 
did bounce at its 50-dma but we suspect more selling in the 
future.  

Our strategy will be the following.  We'll use a trigger point to 
go short under today's low of $33.50 - or $33.49 will be the 
trigger.  If and when we get filled our short-term target will be 
the $26.00 area but we'll actually post our official exit price 
now of $26.60 to beat the rush.  Our initial stop loss will be 
$36.11 but we'll quickly move it lower should shares continue to 
drop.  We do suspect that the $30 level might put up some support 
but tax loss selling by mutual funds looking to sell some winners 
to off set their lowers could really weigh heavily on this stock 
in October (when most funds have their year end).

Annotated Chart - MWRK




Picked on October xxth at $xx.xx
Results since picked:      +0.00
Earnings Date           07/15/02 (confirmed)
 





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

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

Clear Channel Comm. - CCU - cls: 35.74 chg: +0.99 stop: *text*

The Premier Investor Newsletter still remains untriggered in this 
potential long play for CCU.  However, encouraged by the stock's 
ability to maintain support at the $34 level we are going to 
readjust our trigger point and stop loss.  The stock's relative 
strength remains strong and we want to be ready for any upward 
acceleration once the current short covering across the wider 
market sectors runs out of steam.  We're going to make our new 
trigger to go long CCU at $36.65, which is just above the recent 
resistance from mid-September.  Once triggered we'll initiate the 
play with a stop loss at $33.99.  Our short-term target is only 
$40.00 but we feel the stock could trade upwards toward the 200-dma 
near $42.50.

Picked on September xxth at $xx.xx <-- see text
Results since picked:        +0.00
Earnings Date             11/06/02 (unconfirmed)





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

BellSouth Corp. - BLS - cls: 20.06 chg: +1.70 stop: 20.55*new*

It's decision time for conservative traders in this BLS bearish 
play.  Readers already know that the industry has been in a 
dismal spiral of lower growth and many players have already cut 
their estimates.  On top of this negative outlook, a UBS Warburg 
analyst cut estimates again on Monday and lowered their price 
target on BLS from $26 to $22 in addition to lowering targets on 
SBC and VZ.  This morning Prudential initiated coverage of BLS 
with a "sell" rating (how's that for confidence).  Plus, some 
industry analysts think that the Cingular Wireless rollover 
minutes plan, while helping them maintain customers, could drive 
industry prices even lower (Cingular is a joint-venture between 
BLS and SBC).  Now we have this very negative setting to help 
paint the bearish picture.  Then suddenly, this morning Verizon 
(VZ) reaffirms their full year earnings outlook.  Without looking 
I would assume it is a previously reduced earnings outlook but it 
is somewhat positive news.  Combine this with a 346 point rally 
in the Dow Industrials and suddenly we have a massive short 
covering in shares of BLS.  The stock trades higher all day and 
*gasp* manages to close above the psychological $20 mark.  Now 
you see the quagmire that bearish traders need to wade through.  
Do you keep your short position open based on the assumption this 
is just a short-covering bounce and there are no true buyers?  Or 
do you close it since shares did close over the $20 mark and we 
can merely look to reinitiate the play again later at a more 
opportune entry point?  The chart would indicate that BLS should 
have overhead resistance at 20.75-21.00 and again at 21.50-22.00 
areas.  With our stop at 20.82, shares only have to rise 77 cents 
to stop us out.  The Premier Investor Newsletter is going to take 
the following approach.  Shares of BLS have not yet broken their 
descending pattern as seen on the 30-minute chart.  By using a 
trendline tool (across the highs from Sept. 10th and extended 
forward) we can see that this descending resistance will be 
broken should BLS trade above the $20.50 mark.  Therefore, we 
will lower our stop to $20.55 and reduce our risk by 30 cents but 
increase our odds of being stopped out.  Should we get stopped 
out it will be a painful loss but a lot less painful should the 
share price continue to rally!

Picked on September 30th at 18.80
Results since picked:       -1.25
Earnings Date            10/22/02 (confirmed)





---

ChevronTexaco - CVX - close: 72.11 change: +2.86 stop: 73.61

Sure, there's a hurricane off the Gulf of Mexico and CVX has shut 
down several of its operations as a safety measure but we don't 
believe this has had anything to do with the decline in CVX's 
stock nor the rebound we say during Tuesday's session.  Like most 
of the equities we saw in today's market, the trend was up but a 
lot of the buying is heavily suspected of shorts covering 
previous positions.  The CVX stock and the OIX oil index have not 
broken the short-term down trends so we remain bearish.  However, 
we would probably not recommend new positions at this time 
despite the low-risk/reward ratio (these always look better when 
the stock is moving your direction, not against you!).  Should 
CVX fail at the 50-dma again then we might suggest more 
aggressive players evaluate new positions.  

Picked on September 27th at $70.97
Results since picked:        -1.14
Earnings Date             07/30/02 (confirmed)
 



---

Kimberly Clark - KMB - close: 57.76 change: +1.12 stop: 58.63

Deja vu, anybody?  It feels like we were just hear a couple of 
days ago with KMB.  The stock has rallied right back to overhead 
resistance.  We remain bearish as long as shares remain under the 
$58 level.  New positions should be consider very carefully as 
the bearish breakdown is turning into a sideways consolidation.

Picked on September 20th at 56.85
Results since picked:       -0.91
Earnings Date            10/22/02 (unconfirmed)





===============
AT CLOSED PLAYS
===============

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

Alcan Inc. – AL – close: 25.63 change: +0.95 stop: 25.51

Bears were running scared today.  Not because of any fundamental 
change in the aluminum industry but by the incredible sharp rally 
in the broader indices.  Weak-handed bears covered positions as 
shares of AL traded above the psychological $25 mark.  There was 
an interview with an Alcoa (NYSE:AA) executive by Reuters in the 
news.  Basically, they stated that the industry is still in an 
oversupply mode but they tried to put a positive spin on it.  Did 
the market overreact because one guy thought things weren't going 
to get much worse?  It's hard to say.  We would have been stopped 
out at the $25.51 mark and given the lower open on Monday that 
puts our loss at -1.34.  There is still plenty of congestion 
overhead for shares of AL and we don't expect the rally to 
continue for very long but we would not advise opening any new 
bearish positions at this time.  We'll wait and see how shares of 
AL handle the 50-dma currently at 26.71.  FYI, the PnF chart has 
not reversed into a column of X's yet to there is no confirmation 
that this could be new demand for the stock.

Picked on September 30th at 24.17
Results since picked        -1.34
Earnings Date            10/16/02 (confirmed)




---

J.P.Morgan - JPM - close: 19.74 change: +0.75 stop: 20.01

If you're a pure technicals trader then the potential reversals 
we see across several indicators for JPM might make this stock 
look like a bullish candidate.  The stock does appear to have 
broken out of its four-week descending regression channel but 
then it's not everyday you get a 346 point rally in the 
Industrials either.  Shares of JPM didn't trade through our stop 
loss at $20.01 until very late in the afternoon.  Furthermore the 
stock could not maintain its position above the psychological 
round number of $20.  Is this a bullish reversal?  Maybe, but I 
wouldn't be a lot of money on it at this time.  The stock has 
plenty of overhead technical resistance still above it and other 
than short covering we don't see why an investor would want to 
own shares of JPM.  

Picked on September 30th at $17.99
Results since picked:        -2.02
Earnings Date             07/17/02 (confirmed)
 




==================================================================
High Risk / High Reward (HR) section
==================================================================

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

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

Biogen Inc. - BGEN - close: 30.32 change: +1.05 stop: 32.01

Is this just more of the same...the market rallied, the shorts 
covered, look for new bearish entries on strength, etc...?  Maybe 
not.  The biotech index (BTK.X) has been out performing the 
Nasdaq composite but that just means its losses were smaller for 
the quarter than the Nasdaq.  Shares of BGEN have been 
underperforming the BTK but should the sector suddenly find new 
strength we would expect shares of BGEN to join them.  At the 
moment, BGEN has been trading sideways the last few sessions.  
Whether this is an attempt to build a bottom near the $30 level 
or just another step down, as it has done for the last several 
months, is not known.  Currently investors are waiting for the 
FDA to approve BGEN's new psoriasis drug.  The company has 
already received approval from an FDA panel, and the FDA almost 
always accepts their panels' direction, this time the government 
put BGEN's application on a six month review and investors have 
been disappointed in the delays.  Earnings for the company are 
expected on October 18th but no one expects any upside surprises.  
Considering today's 3.3% gain in the Nasdaq and BGEN's close over 
the $30 level we are turning cautious on the stock from a bear's 
perspective.  Shares should have overhead resistance between 
31.50 and 32.00, thus our stop at 32.01.  However, should BGEN 
trade over 31.00 we would see this as an early warning signal for 
bears to get ready to close positions.  A move back under $30, or 
better yet, back under $29 and bears will probably apply more 
pressure again.

Picked on September 30th at $28.69 
Results since picked:        -1.63
Earnings Date             10/18/02 (confirmed)
 



---

Total System Srvs - TSS - cls: 13.76 chg: +0.61 stop: 14.55*new*

TSS may have rallied 4.6% today but given the steep drop on 
Monday's session the stock remains inside its descending 
regression channel.  We know this is sounding like a broken 
record but most of the gains today reek of short covering and TSS 
appears to be no different.  The stock remains under the $14 
level, which has proved to be short-term overhead resistance in 
recent days.  We're going to lower our stop to just a few cents 
above breakeven.  A failed rally at $14.00 could be a potential 
new entry point but it may be best to confirm weakness in the 
Nasdaq before initiating any new positions.  Our official profit 
target remains at $12.09.  FYI, the company's earnings are now 
expected on October 15th, not the 16th as we previously 
published.

Picked on September 23rd at $14.49 
Results since picked:        +0.73
Earnings Date             07/15/02 (confirmed)
 




==================================================================
Split Trader - stock split (ST) section
==================================================================

===============
ST Play Updates
===============

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

Right Mgmt Consultants - RMCI - cls: 24.69 chg: +0.05 stop: 22.99 

Unfortunately there isn't much new to report on RMCI.  The stock 
remains in its consolidation pattern, trading near the bottom 
edge of its ascending channel.  While bulls can be encouraged by 
the higher lows they could also be discouraged by the failure to 
participate in today's monster rally.  New positions might be 
best applied if and when RMCI can trade above the $25.00 mark.  
Current short-term resistance is still at $26.00.  The stock 
split is getting closer on October 15th.

Picked on September 20th at $25.80 
Gain since picked:           -1.11
Earnings Date             10/21/02 (confirmed)






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

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


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

USB     US Bancorp                 19.47     +0.89
MWD     Morgan Stanley             35.80     +1.92
ICI     Imperial Chemical          14.20     +1.07
UGI     UGI Corp                   37.10     +0.75
GVA     Granite Construction       17.13     +0.65
STTX    Steel Technologies Inc     17.83     +0.87
SPAR    Spartan Motors Inc         11.85     +0.55

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

AAUK    Anglo American Plc         13.65     +1.05

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

FRX     Forest Labs                89.85     +7.84
CCE     Coca-Cola Enterprises      22.37     +1.13
CECO    Career Education Corp      51.04     +3.03
EDMC    Education Mmgt Corp        46.06     +1.89
TECH    Techne Corp                34.22     +1.43
NWN     Northwest Natural Gas      30.45     +1.09

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

CERN    Cerner Corp                32.29     -2.92
AD      Advo Inc                   28.69     -3.06

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

ESRX    Express Scripts Inc        51.28     -3.24
GGP     General Growth Properties  50.08     -1.42
BSTE    Biosite Inc                25.84     -3.15
MWRK    Mothers Work Inc           34.27     -3.76



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