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Daily Newsletter, Thursday, 10/03/2002

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PremierInvestor.net Newsletter                 Thursday 10-03-2002
                                                    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:      Another Day, Another Drop
Play-of-the-Day:  A Storm Of Bad News
Market Sentiment: Early Warning Signs


************************************************************
MARKET WRAP  (view in courier font for table alignment)
************************************************************
      10-03-2002           High     Low     Volume Advance/Decline
DJIA     7717.61 - 38.00  7913.47  7693.33 1.92 bln   1327/1834
NASDAQ   1165.56 - 21.70  1197.96  1164.51 1.60 bln   1375/1922
S&P 100   412.27 -  3.66   423.47   411.10   Totals   2702/3756 
S&P 500   818.95 -  8.96   840.02   817.25 
RUS 2000  356.85 -  3.37   364.08   356.49 
DJ TRANS 2183.78 + 48.60  2197.13  2135.35   
VIX        44.96 +  1.60    45.74    42.88   
VXN        58.21 +  0.06    59.68    56.67
Total Vol   3,717M
Total UpVol 1,081M
Total DnVol 2,522M
52wk Highs   104
52wk Lows    640
TRIN        1.28
PUT/CALL    1.04
*************************************************************

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

Another Day, Another Drop

The markets opened with good news for a change with Dow component
DuPont raising guidance from 24 cents to 35 cents a share for the 
3Q. The markets opened positive and held it for almost ten minutes. 
Fear of the ISM numbers due out at 10:00 sent the bulls quickly into 
hiding. 

Dow Chart


Nasdaq Chart


The lack of solid excitement about the DD numbers was due to most 
of the gains coming from cost cutting and a favorable tax rate 
change. Not, a rush of new sales. Dow Chemical lower estimates on
Wednesday due to higher feedstock costs. 

The negative numbers did not last long with the announcement of 
the ISM non-manufacturing numbers and Factory Orders at 10:00. 
The ISM numbers came in at 53.9, which is significantly more
than the expected 51.2. New orders were up as well at 52.3. The 
majority of the gains were due to exports which rocketed from 46.0
in August to 57.5 in September. While analysts initially thought
this was an indicator of increasing global demand I view this as
skewed by news of the current dock strike. Orders were accelerated
to get in ahead of the strike and avoid the current stoppage. The
inventory component fell again to 44.5% from 46.0 in August, which
indicates companies are still lowering inventory to combat slowing
sales. After three months of declines the positive headline number
encouraged traders but one gain is not a trend. 

Factory Orders came in unchanged when the estimates were for a 
drop of -1.2%. This number is very volatile and readers should 
remember my comments from last month. In June the orders fell 
-2.50% and in July it jumped back in the other direction with a
+4.40 gain. It is not surprising to see a flat month to equalize
those pervious excesses. Internally new orders for computer 
equipment fell -4.37% and communications equipment fell -3.95%. 
That is not the killer. Orders for industrial machinery fell 
-14.48%. Definitely not the positive event the headline number
appeared to be. That is if you consider a flat headline number
as positive!

The jobless claims came in higher than expected at 417,000 and 
+5,000 more than last week. The prior week was revised up +6,000
as well. The four week average rose to 423,000 and the highest 
level since May-4th. Continuing claims rose to 3,681,000 and the
highest since June-15th. This does not create any positive 
excitement for the Jobs Report on Friday. With every week in
September higher than expected and then revised upward the 
following week there is a good chance the jobs number could be
negative. With unemployment continuing to rise the outlook is
for an economy that is falling back into recession. The nonfarm
payrolls tomorrow are only expected to be in the +18,000 range
so there is not a lot of room for error. One wonders if the 
constant upward revisions of jobless claims might be forewarning
a downward revision of the nonfarm payrolls from last month. 

Another economic problem that could have already pushed us over
the cliff is the dock lock on the west coast. Dozens of news
stories are hitting the wires about plant closings and temporary
layoffs from a shortage of parts. Trains are not taking any more
shipments to the west coast because there is no place to park the
trailers/containers. Product is beginning to back up at those
manufacturers still able to make goods but now they have no 
place to put them. For companies that have several semi or boxcar
loads of goods a day there are only so many days you can stack
stuff before you have to quit making it for lack of space. Produce
is rotting on the docks. Several automobile plants have shut down
due to lack of parts. Some lines cost $10,000 a minute to stop. 
Depending on who you listen to there are estimates of as many as 
200 container ships stacked up off the coast of California. 

If the lockout was solved today it would take weeks if not a month
to get them all unloaded and there are more on the way. The news 
keeps talking about a $1 billion hit to the economy every day 
the lockout continues. There are estimates of that rising to as
much as $5 billion a day if the lockout continues another week. 
That is based on more shutdowns, layoffs, delays, lack of 
merchandise and the length of time it will take to get everything
flowing again. The "just in time" delivery systems that companies
have been moving to over the years does not perform well in 
situations like this. Just getting a few containers off a few
ships will not solve the problems. For many manufacturing plants
they depend on numerous parts from manufacturers all over the 
world. Just getting one ship unloaded may only supply a couple
of the needed parts. Until all the parts get up to speed and 
inventories replenished, complete production cannot resume in 
many instances. 

In my opinion there is no doubt left that the country will fall 
back into a double dip recession based on this problem alone. 
If the quarterly GDP growth from Q1 to Q2 was only $29 billion 
and this quarter was not expected to be that strong then a two 
week hit of $15 billion or so (probably a low estimate) would 
put us very close to recession levels. Add to this problem the 
dead stop in the economy that is already being reported for 
Aug/Sept and the only light I see in the tunnel is the train. 

There are companies benefiting from the lockout. FDX, UPS, YELL, 
ROAD are all moving up strongly based on the anticipation of
increased freight traffic and air shipments. With companies 
sending truckloads of product to any port not on the west 
coast the truckers are doing well. The air shipments in and
out of the U.S. by UPS and FDX they are about to break out to
new highs. The trouble in chasing these stocks is that once
the lockout is over the shipments will quit. It is not lasting
business. It costs 15 times as much to airfreight as ship by sea.

After the close today EMC said it would lay off another 1,350
employees or 7% of its work force. This was in response to claims
that the technology spending slump shows no signs of abating. 
EMC said it would post a bigger loss than expected and no longer
expected to turn a profit in the second half of 2002. Joe Tucci,
president of EMC, said "the IT spending environment continues
to be brutal and even got worse as the quarter ended." While 
EMC does not have far to fall at $5.00 the "brutal" and "was
getting even worse as the quarter ended" comments should spell
doom for the other tech stocks that have back end loaded quarters. 
IBM, INTC, ORCL, BRCD, QLGC, etc, should all suffer tomorrow.
With an increasing number of warnings that the spending strike
was getting worse in September there is a very good chance that
there will be some more high profile warnings in the wings and
some misses for companies that failed to warn. With earnings
starting in earnest next week the outlook is grim. 

Other news after the close included a warning from LH of lower
earings. IWOV guided lower and DV cut estimates due to the 
"technology recession". FDRY, RIMM, CYTC, FMKT and DCTM affirmed
estimates. AA had its credit cut to A from A+ by S&P in advance
of its earnings before the open tomorrow. Makes you want to rush
out and buy calls on AA tonight. (grin) SBUX said its same store
sales grew +9% in September. 

Like I mentioned earlier the nonfarm payrolls tomorrow will be
the key. AA may miss earnings but they are not a high profile
tech stock and could be ignored. The jobs are the key. With the
Dow closing only +16 points from where it started the week and
after a 500 point swing there is no clear direction for Friday.
There is no massive short attack but buyers have been soundly
pushed back on every rally attempt. 

My gut feel is that we would be a lot lower tonight if the 
$600 million accidental short by Bear Stearns on Wednesday at
the close had not occurred. They claimed last night that they
had hedged all of it in the 20 min after it was discovered just
before the close. What did you expect them to say. Oh my God!
We are SHORT $600 million of S&P stocks and we don't know what
to do. Can you say open season on Bear Stearns? We would have
had a +300 point gap open as everyone tried to get in front of
them with an order. They had to say "no problem, we got it 
covered." Want to bet they were not buying stock like crazy
in small lots all day long? I would bet my lunch money that
was the bottom under the market today. Sure, they were short
and a falling market would have helped them get out alive but
nobody can guarantee a falling market and a $622 million short
can turn into a major loss in only a few minutes of a short
squeeze. I would bet they pulled the trigger on several million
shares in a knee jerk reaction to the better than expected
ISM and Factory Order numbers. But, this is all just supposition
on my part. 

Friday is another day. With the EMC warning and no overly positive
news on the nonfarm payrolls I would still think the overall 
trend is still down. Do you think anybody really wants to be long  
on Monday with a possible warning before the bell by IBM or another
big tech company hit by "brutal" drops in IT spending in September?
IBM last warned on Monday, April 7th, before the bell. Will history
repeat itself? Just my opinion!

We are adding something new tonight. Alan Hewko, a prior
futures trader for a private hedge fund, is going to start a
section on futures. For the next week or so he is going to do
a nightly futures wrap for those traders who dabble in the
futures markets. If there is enough interest in the section
we will continue it and maybe even add intraday futures trading 
signals to the website. Read his wrap tonight and if you would 
like us to continue it send us an email with your comments to 
the address on the wrap. 

Enter Very Passively, Exit Very Aggressively!

Jim Brown
Editor


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

General Motors - GM - close: 37.77 change: -0.95 stop: 41.51

Company Description:
General Motors (NYSE: GM), the world's largest vehicle 
manufacturer, designs, builds and markets cars and trucks 
worldwide, and has been the global automotive sales leader since 
1931. GM employs about 355,000 people around the world. (source: 
company web site)

Why We Like It:
Frankly we can't figure out why an investor would want to own 
shares of GM at this time.  The company has been getting squeezed 
from its 0% financing incentives for months but these appear to 
be running out of steam as car buyers who were going to buy a car 
at 0% already have.  Furthermore investors are growing 
increasingly concerned over the company's healthcare obligations 
- and they should be!  According to a Financial Times article, GM 
paid out $3.2B in medical and life insurance costs just last year 
to pensioners.  The company now estimates that its current costs 
for future obligations could be more than $52 billion.  This is 
more than double GM's market cap (currently less than $22B).  
These estimates are using current healthcare costs, which 
everyone expects to rise.  The company has almost 460,000 US 
pensioners on its healthcare plan.  This puts a new perspective 
on just how costly the rising healthcare expenses really are.

On top of the current economic doldrums and its healthcare 
nightmare GM is also suffering from the current West Coast port 
lock out.  The much publicized port lock out has ships stranded 
in the harbor and the largest auto plant on the West Coast, 
NUMMI, a joint venture between GM and Toyota is standing still.  
It's bad enough that GM has to worry about slower sales but how 
much worse will it be if you don't even have the products to sell 
due to an unexpected factory shut down (at least for those 
dealers that sell the Pontiac Vibe).

To add insult to injury the government is also upgrading its 
investigation into potential engineering defect in some of GM's 
vehicles.  The issue involves sticky throttles in 3.1 million 
Chevy Silverados, Tahoes, Suburbans, Avalanches, and GMC Sierra 
pickups, Yukons, XLs and Cadillac Escalades from 1999 to 2002.  
Now the company will have to worry over a potentially very 
expensive recall.

So no wonder the chart is in a slow burn downward.  Every rally 
is met with more selling and shorts merely reposition themselves 
for the next slide.  The close under the $38 mark is a multi-year 
low for GM and we feel that the drop could pick up speed if the 
broader markets choose to hasten their own declines.  We're going 
to initiate the play at current levels and start with a stop loss 
41.51.  We are not going to list a profit target just yet as this 
bear run might go for a while.

Annotated Chart - GM



Picked on October 3rd at $37.77
Results since picked:     +0.00
Earnings Date          10/15/02 (unconfirmed)





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

Early Warning Signs

by Steven Price

It was starting to appear as though we would be range bound for a 
while.  Each upward venture in the Dow has been met with strong 
resistance at 8000, while we have bounced around 7500 repeatedly.  
In the Nasdaq, we have seen a ceiling of 1225, and a floor of 
1160.  It looks like that floor may be tested tomorrow, after 
today's 21.74-point drop was followed by a severe warning after 
the bell from EMC.  Yesterday, Advanced Micro Devices (AMD) 
warned after the bell that heir earnings would fall short of 
previous guidance, as they would lose 0.49 per share on revenue 
that would be 18% below expectations.  The warning sent the chip 
sector tumbling, as the Semiconductor Sector Index (SOX.X) 
reached a new 52-week closing low of 233.74.  The 52-week 
intraday low of 231.74 will most likely be tested on the open 
tomorrow, as EMC said that, "The IT spending environment 
continues to be brutal. In fact, it got even worse at the very 
end of the quarter."  It also announced that it would lay off 
about 7% of its workforce.

The market environment is seen as so poor that 5 IPOs were 
withdrawn today. They ranged from a real estate trust, to a 
biotech, to an energy management firm, reflecting the market 
concern in all sectors.   Banks were some of the biggest losers 
today, as fear of bad debts hit the group, following warnings 
yesterday from Comerica and Bank of New York.  The Kbw Bank Index 
lost 5.34% to close at 655.76 and the S&P Banks Index lost 6.01% 
to close at 254.94.

At one point, it looked like the Dow would re-test 8000 to the 
upside and the makings of a rally seemed in place.  We started 
the day with a surge to 7913.47, up 157.86 on the day, before 
failing and falling all the way to 7693.33.  The end of the day 
brought another rally attempt that was rejected right around 7800 
and we ended the day on a down swing. 7500 is still over 200 
points away, but given the triple digit swings we have 
experienced on an almost daily basis in the Dow, that could be 
tested any day.  

The Nasdaq, on the other hand, looks almost certain to break 
support after the recent tech warnings.  With only 5 points of 
breathing room until support at 1160, and the SOX setting a new 
low, the Nasdaq seems certain to follow.  A break in support for 
the techs could be the domino that leads the Dow to a close below 
7500.

On the positive side, all those Starbucks within a couple of 
blocks of one another apparently have yet to saturate the market.  
The company reported a same store sales increase of 9% in 
September on 5-week revenues of $338 million.  That was a 26% 
jump from a year ago, when most of the country was sitting at 
home watching updates on the September 11 attacks.

Martha Stewart resigned her post on the board of the NYSE, citing 
problems with the publicity she has received regarding her sale 
of ImClone shares.  After her broker's assistant agreed to 
testify against her in the insider trading scandal, it appears 
she is heading underground for a while.  

The bullish percentages of the Dow (10%), S&P 500 (28%), Nasdaq 
Composite (28%), and NDX (20%), are all in oversold territory.  
While that doesn't mean we are necessarily in for a rebound, it 
does indicate that the spring is being wound tighter.  My guess 
is that whichever direction we break first in the Dow will be 
good for several hundred points.   With the Nasdaq looking as 
though it will break to the downside, the Dow is likely to 
follow.  

While I have painted a picture of doom and gloom, I can't help 
but occasionally listen to the little bull on my shoulder 
pointing out the rebound that kicks in every time we get around 
7500. Of course the bear on the other shoulder seems to have 
sharper claws these days, and with unemployment numbers coming out
tomorrow, I'm still leaning in its direction.


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

Market Averages

DJIA ($INDU)

52-week High: 10679
52-week Low :  7532
Current     :  7717

Moving Averages:
(Simple)

 10-dma: 7808
 50-dma: 8405
200-dma: 9496

S&P 500 ($SPX)

52-week High: 1176
52-week Low :  775
Current     :  819

Moving Averages:
(Simple)

 10-dma:  833
 50-dma:  886
200-dma: 1032

Nasdaq-100 ($NDX)

52-week High: 1734
52-week Low :  833
Current     :  833

Moving Averages:
(Simple)

 10-dma:  855
 50-dma:  925
200-dma: 1236


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


The Semiconductor Index (SOX.X): A new day, a new 52-week low.  
The semis gave us a scare with a higher high on Wednesday, 
trading all the way up to 263 intraday, before falling to close 
under 250.  Today, that rollover continued after AMD warned that 
earnings and revenue would fall short of expectations.  The index 
closed at 233, which is a new 4-year low, and we will be watching 
the 231 level, which is the intraday low from 9/24.  A break 
below this level could have us testing 200 soon.  Each time it 
doesn't seem possible that the group could fall to even lower 
valuations, they surprise us.  Actually, I'm not going to predict 
a bottom in this sector, just ride it down and lower my stops.  

52-week High: 657
52-week Low : 233
Current     : 233

Moving Averages:
(Simple)

 10-dma: 244
 50-dma: 296
200-dma: 458


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

Market Volatility

The VIX just keeps adding to its pattern of higher highs and 
higher lows.  We could see 50 soon, if the pattern in the Dow 
keeps setting lower highs and lower lows - see the correlation. 
The VXN has been moving sideways, but if the Nasdaq breaks 
support at 1160, we should see a big gain there, as well. Friday 
should be interesting as weekend premium sellers compete with 
market activity.  If we get a market wide drop after tonight's 
earnings warning from EMC, those sellers may be the only thing 
keeping a lid on both of these indices. 

CBOE Market Volatility Index (VIX) = 44.96 +1.60
Nasdaq-100 Volatility Index  (VXN) = 58.21 +0.06

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

          Put/Call Ratio  Call Volume   Put Volume

Total          1.04        480,354       501,686
Equity Only    0.98        354,311       347,929
OEX            1.47         22,247        32,728
QQQ            1.14         49,350        56,256

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

Bullish Percent Data

           Current   Change   Status
NYSE          32      - 1     Bull Correction
NASDAQ-100    20      + 1     Bear Confirmed
Dow Indust.   10      + 0     Bull Correction
S&P 500       27      + 0     Bear Confirmed
S&P 100       22      + 2     Bear Confirmed

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

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

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

5-Day Arms Index   1.67
10-Day Arms Index  1.43
21-Day Arms Index  1.45
55-Day Arms Index  1.37

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

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

Market Internals

        Advancers     Decliners
NYSE       1127          1589
NASDAQ     1315          1833

        New Highs      New Lows
NYSE         43             180
NASDAQ       20             261

        Volume (in millions)
NYSE     1,913
NASDAQ   1,643


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

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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PremierInvestor.net Newsletter                 Thursday 10-03-2002
                                                    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:  ACS, MERQ

Stock Bottom / Active Trader
  New Bearish Plays:     LNC, GM
  Bullish Play Updates:  CCU
  Bearish Play Updates:  EXPE, FLIR, KMB, MWRK
  Closed Bearish Plays:  BLS

High Risk/Reward
  Bearish Play Updates:  BGEN, TSS

Split Runs
  Closed Bullish Plays:  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 (NB) Tech Stock section
==================================================================

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

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

InVision Technologies - INVN - cls: 30.40 chg: -0.20 stop: 29.98

Shares of INVN traded strong this morning after the company 
announced that it had received an $87.7 million order from the 
Department of Transportation for 25 explosives detection systems.  
Year to date, the DOT has ordered over half a billion dollars 
worth of devices.  Today's news sounds positive, but the bulls 
were not able to maintain the early morning gains.  Shares 
petered out below the $32.00 level and sold off sharply during 
the final half-hour of trading.  Today's close under the 200-dma 
($30.72) is not a good sign for the bulls.  However, shares have 
thus far been able to hold above psychological resistance at 
$30.00, near lower end of the stock's ascending regression 
channel.  Our stop-loss will remain safe as long this level 
holds.  Hopefully today's relative strength versus the NASDAQ is 
a harbinger of an imminent rebound.  But in light of the rising 
volume and falling daily stochastics, we would not advise taking 
any new entries before INVN clears the $32.00 level.

Picked on September 23rd at $31.70
Results since picked:        -1.30
Earnings Date             10/23/02 (unconfirmed)
 



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

Affiliated Cmptr Srvcs - ACS - cls: 39.22 chg: -1.84 stop: 44.56

Not a bad start for this short play!  The bears turned in a solid 
performance on Thursday and pushed ACS below whole-number support 
at $40.00.  Shares underperformed the NASDAQ, moving lower by 
4.4% on strong volume of 2.5 million shares.  The manner in which 
shares have sold off from the short-term descending channel 
(which roughly coincides with the 50-dma) is very encouraging.  
Further downside action in the tech sector could have ACS quickly 
approaching our profit-target of $35.50.  New entries can be 
targeted on a failed rally near $40.00 or a move under today's 
low of $38.89.  Possible support lies at $38.00, but the bearish 
MACD and daily stochastics are hinting towards a more pronounced 
decline.  P-n-f traders will also note that a move under $38.00 
will trigger a double-bottom sell signal.  In breaking news this 
evening, former storage high-flyer EMC announced an earnings 
warning and gave some very negative comments about future IT 
spending.  This could help to drag ACS lower on Friday.  Although 
we're keeping our stop set at $44.56, those looking to minimize 
risk could use a stop just above today's high at $42.36.
 
Picked on October 2nd at $41.06
Change since picked:      +1.84
Earnings Date          07/30/02 (confirmed)




---

Mercury Interactive - MERQ - cls: 17.06 chg: -0.56 stop: 18.31
 
Although we weren't able take advantage of MERQ's intraday spike 
on Tuesday, it just might be a matter of time before shares 
return to the $15.50 region.  The stock was hovering below near-
term resistance at $18.00 this afternoon when Banc of America 
released some lukewarm comments regarding the company's user 
conference, which is being held this week.  BAC said that there 
are no visible catalysts for growth, and current estimates are 
still at risk.  This news sent MERQ falling from breakeven 
territory to a 3.1% loss by the closing bell.  Volume was the 
strongest in over two weeks.  Judging by the conviction of 
today's sell-off, we suspect more downside is in store.  Should 
this be the case, we'll close this play if MERQ trades at or 
below our official profit-target at $15.51.  Those with a 
slightly more aggressive strategy could target a retest of the 
Tuesday low at $15.15.  Short-term traders looking to open new 
short positions can watch for a move under today's low of $16.97.

Picked on September 30th at $17.98 
Gain since picked:           +0.92
Earnings Date             10/17/02 (confirmed)
 





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

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

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

Lincoln National - LNC - close: 28.89 change: -1.31 stop: 31.06

Company Description:
With headquarters in Philadelphia, Lincoln Financial Group has 
consolidated assets of nearly $95 billion and had annual 
consolidated revenues of $6.4 billion in 2001. Through its 
retirement planning and wealth accumulation/protection business, 
the company provides employer sponsored retirement programs, 
annuities, life insurance, 401(k) plans, 529 plans, mutual funds, 
managed accounts, institutional investment, financial planning 
and advisory services. (source: company press release)

Why We Like It:
Insurance stocks have been trading with a bearish slant over the 
past month and a half.  Life insurance issues are looking 
particularly weak, thanks in large part to Fitch, who slashed 
debt ratings on a slew of stocks in the group.  One of the 
companies targeted by the downgrade was Lincoln National.  LNC 
has been trending lower since April.  A short-covering rally in 
July/August was met with heavy selling, and the September 19th 
credit reduction seemed to renew the bears' resolve.  What really 
grabbed our attention was the action point offered by today's 
4.3% decline.  LNC sold off from whole-number support at $30.00 
and closed under its July low.  Pulling back to a weekly chart, 
we can see that shares are in the process of retracing the steep 
rally from 2000.  Given the lack of underlying support, we 
believe shares could quickly reach the $25.00 level.  This 
outlook is supported by the falling daily stochastics (5,3,3) and 
fresh double-bottom sell signal on the p-n-f chart.  Short at 
current levels, we'll be looking to ride LNC down to our official 
profit-target at $25.06.  More aggressive traders could target a 
retest of the 2000 lows near $23.00.  Our stop-loss is set at 
$31.06.  This will force the stock to trade well above 
psychological resistance at $30.00 and today's high at $30.30.  
We'll lower our stop if the play begins to work to our favor.  On 
a related note, traders who are looking for a higher dollar stock 
may want to check out CI.  The stock is displaying a fresh 
breakdown and looks like a great short.  It's fundamentally and 
technically very similar to LNC.  In terms of sector strength, 
bears can be encouraged by the action in the IUX.X insurance 
index.  The recent short-covering bounce has completely fizzled 
out, and it may only be a matter of time before the IUX falls 
under its relative low at 232. 

Click here for an annotated chart of LNC:



Picked on October 3rd at 28.89
Results since picked:    +0.00
Earnings Date         10/30/02 (confirmed)
 



--- 

General Motors - GM - close: 37.77 change: -0.95 stop: 41.51

Company Description:
General Motors (NYSE: GM), the world's largest vehicle 
manufacturer, designs, builds and markets cars and trucks 
worldwide, and has been the global automotive sales leader since 
1931. GM employs about 355,000 people around the world. (source: 
company web site)

Why We Like It:
Frankly we can't figure out why an investor would want to own 
shares of GM at this time.  The company has been getting squeezed 
from its 0% financing incentives for months but these appear to 
be running out of steam as car buyers who were going to buy a car 
at 0% already have.  Furthermore investors are growing 
increasingly concerned over the company's healthcare obligations 
- and they should be!  According to a Financial Times article, GM 
paid out $3.2B in medical and life insurance costs just last year 
to pensioners.  The company now estimates that its current costs 
for future obligations could be more than $52 billion.  This is 
more than double GM's market cap (currently less than $22B).  
These estimates are using current healthcare costs, which 
everyone expects to rise.  The company has almost 460,000 US 
pensioners on its healthcare plan.  This puts a new perspective 
on just how costly the rising healthcare expenses really are.

On top of the current economic doldrums and its healthcare 
nightmare GM is also suffering from the current West Coast port 
lock out.  The much publicized port lock out has ships stranded 
in the harbor and the largest auto plant on the West Coast, 
NUMMI, a joint venture between GM and Toyota is standing still.  
It's bad enough that GM has to worry about slower sales but how 
much worse will it be if you don't even have the products to sell 
due to an unexpected factory shut down (at least for those 
dealers that sell the Pontiac Vibe).

To add insult to injury the government is also upgrading its 
investigation into potential engineering defect in some of GM's 
vehicles.  The issue involves sticky throttles in 3.1 million 
Chevy Silverados, Tahoes, Suburbans, Avalanches, and GMC Sierra 
pickups, Yukons, XLs and Cadillac Escalades from 1999 to 2002.  
Now the company will have to worry over a potentially very 
expensive recall.

So no wonder the chart is in a slow burn downward.  Every rally 
is met with more selling and shorts merely reposition themselves 
for the next slide.  The close under the $38 mark is a multi-year 
low for GM and we feel that the drop could pick up speed if the 
broader markets choose to hasten their own declines.  We're going 
to initiate the play at current levels and start with a stop loss 
41.51.  We are not going to list a profit target just yet as this 
bear run might go for a while.

Annotated Chart - GM



Picked on October 3rd at $37.77
Results since picked:     +0.00
Earnings Date          10/15/02 (unconfirmed)





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

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

Clear Channel Comm. - CCU - cls: 34.85 chg: -1.10 stop: 33.99 

Per the Wednesday Premier Investor Newsletter, we were triggered 
in CCU during the brief rally higher in yesterday's session.  
Unfortunately, that rally failed and the stock continued to slide 
today consider the broader market weakness.  At this point in the 
game we would not suggest any new long positions until we observe 
yet another bounce at the $34 level or higher.  Odds are, if the 
Jobs report Friday morning is negative, the broader markets will 
selloff into the weekend and CCU will trade below our stop at 
33.99.	Should the Dow Industrials and the SPX form a bottom or 
at least a significant bounce from their July lows then we'll 
keep an eye on CCU.  The stock did and still shows a quadruple-
top breakout on its PnF chart while attempting to pierce its 
descending bearish resistance trendline.

Picked on October 2nd at $36.65 
Results since picked:     -1.80
Earnings Date          11/06/02 (unconfirmed)




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

Expedia Inc - EXPE - close: 44.82 change: -1.24 stop: 48.56*new*

The investor flight continues away from shares of EXPE.  Three 
days after ending their relationship with Expedia.com, NorthWest 
Airlines has slashed several of their "leisure" fares by 40%.  
The airlines said that customers can purchase tickets at their 
own website, nwa.com or at orbitz.com.  Volume continues to be 
strong in EXPE shares and the technical indicators are picking up 
speed.  Aggressive bears might consider positions now that the 
stock is under the $45 mark.  The stock is approaching oversold 
levels and while we expect a bounce we're not looking for it 
until shares trade near $41.  We are going to lower our stop to 
$48.56 to reduce our exposure should the unthinkable occur.

Picked on October 2nd at $46.06
Results since picked:     +1.24
Earnings Date           10/23/02 (confirmed)
 



---

FLIR Systems - FLIR - close: 33.40 chg: -0.12 stop: 37.01

The descent is slowing for shares of FLIR but the stock remains 
below previous support levels.  With technical indicators pegged 
in oversold regions and the stock down six days in a row we would 
suspect shares will bounce higher soon (assuming the markets 
don't crash tomorrow on a negative jobs number).  Traders might 
want to keep an eye out for a failed rally at the $35 or even the 
$36 levels.  Should the stock rally and begin to rollover at 
either target we'd consider new positions.  We would consider 
this a somewhat longer-term trade where we expect to hold the 
play for three to four weeks unless a sudden breakdown occurs and 
we can exit for a profit sooner than expected.

Picked on October 2nd at $33.52
Results since picked:     +0.12
Earnings Date          07/24/02 (confirmed)
 




---

Kimberly Clark - KMB - close: 57.00 change: +0.06 stop: 58.63

Once again shares of KMB have failed to rally over the $58.20 
level for the third time in the last five sessions.  This display 
of overhead resistance is certainly positive for the bears but 
we've actually consider dropping KMB for two reasons.  Reason 
number one is that the FPP.X forest, paper products index has 
continued to slide lower but KMB is not following it down.  
Reason number two would be the very short-term trend of higher 
lows after KMB's recent dip to $55.60.  News has been relatively 
quiet and obviously there was no reaction in the stock price to 
KMB's presentation at a conference in London this Tuesday.  The 
failed rally today and weakness with shares near the low for the 
session plus the weakness in the broader markets has convinced us 
to hold KMB for another session or two to see what develops.  

Picked on September 20th at 56.85
Results since picked:       -0.15
Earnings Date            10/22/02 (unconfirmed)




---

Mothers Work, Inc. - MWRK - cls: 33.92 chg: -2.64 stop: *text*

We have not yet been triggered in our short play for MWRK.  The 
stock rallied on Wednesday from its support at the 50-dma but the 
stock was unable to follow through on the move.  The selling 
pressure came on strong again today and began to pick up speed 
throughout the session.  The close back under $34 looks positive 
but MWRK is still 40 cents from our trigger point.  If and when 
we do get triggered at 33.49, we'll start the play with a stop at 
36.11.  Traders might notice that today's decline was on strong 
volume of 123K shares, which is almost double the daily average.  
If the jobs report is negative tomorrow this stock could move in 
a hurry.  We're going to get specific on our entry should MWRK 
gap down in the morning.  We will open the bearish play should 
MWRK trade at or below $33.49 but not if the stock gaps open 
below $32.50.  The reason we are using such a wide range is that 
our target for the move is $26.60, which is above previous 
support and the stock's 200-dma.

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




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

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

BellSouth Corp. - BLS - cls: 21.00 chg: +1.75 stop: 20.55

The regional bells caught a bid today after Goldman Sachs said 
lower valuations and the likelihood of some positive news over 
the next half-year had led them to raise its sector rating to 
"Market Weight."  The firm said that it specifically favors BLS, 
SBC, VZ, and CTL.  This was not conducive to our short play.  
Although the prospects of a telecom recovery remain dubious at 
best, today's news was more than the bears could handle.  
Technically, BLS was looking somewhat strong on Tuesday after 
staging a sharp reversal from the relative lows and closing above 
the $20.00 level.  We elected to inch our stop down to $20.55, 
just above the descending trendline on the 30-minute chart.  This 
level was violated on Thursday morning.  As a matter of fact, BLS 
traded above our previous stop and made it all the way to the 
$21.00 resistance level.  Our play was closed for a loss of 9.3%.  
That's certainly not the result we were looking for when we added 
this short play last week.  However, our longer-term outlook for 
BLS and the overall telecom group remains bearish.  BLS is still 
in its multi-month downtrend and the fundamental picture has not 
begun to improve, despite Goldman's comments. (Veteran traders 
may recall that GS analyst Abby Joseph-Cohen was erroneously 
pounding the table on telecom stocks last year.)  We would 
consider shorting BLS again on a failed rally near the 50-dma at 
$23.50.

Picked on September 30th at 18.80
Results since picked:       -1.75
Earnings Date            10/22/02 (confirmed)






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

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

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

Biogen Inc. - BGEN - close: 29.31 change: +0.17 stop: 32.01

More sideways trading action for BGEN, but the bears can't really 
complain.  Shares have moved back under whole-number resistance 
at $30.00, and today's session saw a failed rally at that level.  
BGEN will have a tough time staying above the $29.00 mark if the 
NASDAQ continues to decline.  The BTK.X biotech index was 
relatively strong compared to the NASDAQ on Thursday, but the 
small gain is hardly anything to write home about.  The lack of 
any notable news has had the group bouncing around in a 
directionless fashion.  Speaking of directionless, that's a 
pretty good description of BGEN's daily stochastics and MACD.  
The flat oscillators make it difficult to tell where the stock is 
headed next.  Of course, bears will point out that the p-n-f 
chart is currently on a triple-bottom sell signal.  If shares do 
head lower, new entries can be gauged on a move under the 
relative low at $28.43.

Picked on September 30th at $28.69 
Results since picked:        -0.62
Earnings Date             10/18/02 (confirmed)




---

Total System Srvs - TSS - cls: 12.60 chg: -0.70 stop: 13.06 *new*

We're getting close!  Our profit-target at $12.09 is just 51 
cents away.  There wasn't been any company-specific news to 
explain it, but TSS tumbled to a 5.2% loss today.  Many investors 
seem to be unwilling to hold a stock that has fallen to 1998 
levels.  The multi-month downtrend is firmly intact, and shares 
appear to be accelerating to the downside.  The daily stochastics 
have begun to reverse the middle range, offering technical 
evidence that TSS is not yet oversold.  At the current rate we 
would not be surprised to see our profit-target reached on 
Friday.  Of course, the recent decline demands a tighter stop-
loss.  We're currently up 13% on this paper trade.  Our new stop 
is located at $13.06.  This should protect a gain of nearly 10%.  
Those willing to give TSS a little more breathing room could use 
a stop just above today's high at $13.23.  Given the ugly 
technical picture, we would not be surprised to see shares 
eventually fall under the $12.00 level.  Aggressive traders may 
want to be watching for an eventual decline to the $10.00 region.  
We'll be more than happy to close this play at $12.09, for a gain 
of more than 15%.

Picked on September 23rd at $14.49 
Results since picked:        +1.89
Earnings Date             07/15/02 (confirmed)
 





==================================================================
Split Runs / Split Trader (ST) section
==================================================================

===============
ST Closed Plays
===============

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

Right Mgmt Consultants - RMCI - cls: 22.81 chg: -0.06 stop: 22.99 

This has been a tough season to play stock splits and the drought 
of plays for this section of the newsletter shows it.  RMCI 
attempted to put up a good fight but the broader market averages 
continue to slip lower and it's too hard to fight market 
momentum.  The PI newsletter was actually stopped out of RMCI 
late Wednesday when shares traded below the $22.99 stop loss.  
The weakness continued today as the stock touched $22.00 and 
surpassed its 50 & 200-dma's before rebounding towards the close.  
Thursday's move could be a potential candlestick reversal pattern 
but given the thought of a weak jobs report tomorrow we're going 
to take a step back before looking at RMCI for any new positions.  
The stock still has a week and a half before the stock split and 
attentive traders could still find an effective bullish trade if 
the market will permit it.

Picked on September 20th at $25.80 
Gain since picked:           -2.81
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 

CTL     Centurytel Inc             25.40     +1.39

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

VXGN     Vaxagen                   10.17     +1.17
ADTN     Adtran Inc                18.01     +3.00

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

VZ       Verizon Communications     32.90     +2.55
WWY      William Wrigley            51.61     +1.06
WLP      Wellpoint Health           78.25     +1.66
ROAD     Roadway Express            38.95     +2.04
COO      Cooper Companies           53.40     +1.89
TECH     Techne Corp                34.75     +1.50

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

CRR     Carbo Ceramics              33.76     -1.20
MIK     Michaels Stores             41.11     -3.96
GDW     Golden West Fincl           59.56     -2.58
FITB    Fifth Third Bancorp         59.10     -2.60
BZH     Beazer Homes                60.50     -3.80

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

MNI      McClatchy Co              60.09     -1.83
UCBH     Ucbh Holdings             35.87     -3.11
EWBC     East West Bancorp         32.56     -1.24
WSBC     Wesbanco Inc              21.84     -1.69




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