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Daily Newsletter, Tuesday, 10/15/2002

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PremierInvestor.net Newsletter                 Tuesday 10-15-2002
                                                   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:      +1050 Points In Four Days
Market Sentiment: Out Of Steam
Play-of-the-Day:  Tons Of Bearish Signals!

-----------------------------------------------------------------
U.S. Market Numbers
-----------------------------------------------------------------
MARKET WRAP  (view in courier font for table alignment)
-----------------------------------------------------------------         
      10-15-2002           High     Low     Volume Advance/Decline
DJIA     9255.68 +378.30  8255.68  7883.23 2.19 bln   2418/ 834
NASDAQ   1282.42 + 61.90  1282.74  1259.87 1.89 bln   2568/ 860
S&P 100   447.26 + 21.72   447.26   425.54   Totals   4986/1694 
S&P 500   881.26 + 39.82   881.26   841.44 
RUS 2000  360.53 + 14.00   360.63   346.53 
DJ TRANS 2286.46 +147.70  2286.51  2139.53   
VIX        39.74 -  2.87    41.21    39.58   
VXN        56.37 -  2.71    58.29    55.33
Total Vol   4,341M
Total UpVol 3,841M
Total DnVol   457M
52wk Highs    75 
52wk Lows    277
TRIN        0.42
PUT/CALL    0.78
-----------------------------------------------------------------

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

+1050 Points in Four Days

A monster rally prompted by bottom fishing last week and short
covering this week. Surprise earnings gains by several Dow stocks
and upgrades to others gave shorts a serious headache today. The
huge gains are begging for profit taking and with the tech 
earnings after the close it looks like Wednesday will be the day.

Dow Chart


Nasdaq Chart



Kicking off the rally this morning was news from JNJ and Citigroup,
both Dow components, that each had beaten earnings estimates by
a penny. GM, also a Dow component, beat estimates by 21 cents. 
Suddenly the bear market and the possible double dip scenario
was history and bulls bought as bears ran for cover. Positive
comments about MSFT and IBM added to the explosion. The Dow
gapped up over +200 points and never looked back. The Nasdaq 
gapped up over +50 points and then moved sideways the rest of 
the day until tech shorts covered before the close to avoid a
positive Intel surprise. 

They should have not worried as the surprise was negative not
positive. Intel missed estimates of 13 cents by posting only
11 cents and guiding lower again. The trouble in PC land is
simply no buyers, lots of inventory and no IT recovery in sight. 
Intel posted revenue that was only slightly below what was
expected but earnings were much less. Intel blamed it on slower
sales, higher inventory costs, excess capacity and unrealized
manufacturing savings. They also said they were cutting back on
capital expenditures and that tanked the equipment suppliers. 
They also said they were going to reduce spending by re-using
some older equipment and older technologies that had been 
scheduled for replacement. They said margins would fall to 49%
for the next quarter, which was down from 51%. Also, they expect
revenue to be flat to up only slightly. Considering this is
their strongest quarter that outlook is bleak. A 2% margin drop
on $6.5 billion in revenue would be more than most companies make
in total. They made $686 million this quarter and a -$130 million
drop in margins for the 4Q puts their earnings in serious trouble. 
They said PC demand was coming in at the very low end of 
forecasts. This does not paint a very pretty picture.

NVLS beat analyst's lowered estimates by 2 cents but the stock 
got killed in after hours on the Intel news. After closing near 
$26 it traded in the $23.50 range in after hours. They said they
were on track to post a higher profit for the 4Q despite an
anticipated drop in sales. The CEO said there was a glimmer of
hope in the industry for those with cash. Despite the lack of
a recovery those with cash were gaining market share and 
restructuring to be more profitable when the recovery finally
came. They said 4Q bookings could be 10% below the prior forecast.

Motorola hit estimates of 5 cents, which they had affirmed twice. 
The CEO backed off previous forecasts of a rebound in the chip
sector for the last quarter and 2003. They did not warn but said
the road ahead would be anything but smooth. He said the slow
quarter-to-quarter upward growth was over and rougher times were
ahead. 

AMCC beat estimates by a penny and said they were focused on
cutting costs and hoarding cash until a recovery appeared. They
plan on continuing to invest in new product lines in an effort
to stimulate sales that had dropped -27%. 

Oracle made some comments today about earnings visibility being
minimal. This depressed some of the software stocks and should
make investors cautious before MSFT earnings on Thursday. However,
I think Thursday is the least of our problems. The biggest 
problem in our outlook is IBM which reports on Wednesday after
the close. IBM was down -2.50 after the close based on the Intel
warning. There is a very good chance that IBM disappoints
based on the Intel miss. IBM has the consulting business and
a strong services business to help offset losses in the equipment
division but how big are those losses? If Intel says there is
no recovery, no seasonal 4Q buying surge and no IT recovery in
sight then how can IBM weather the storm?

35% of the S&P announces earnings this week. Tomorrow there are
numerous big caps including several Dow components. BA, AMR, HON, 
CAT, F, GD, JPM, MER, PFE, PGR, IBM are among the most watched. 
Tech stocks AMD, AKAM, ATI, AAPL, BRKT, CLS, CTSH, EFII, EXTR, 
IWOV, LSS, QLGC, RFMI, RSAS, SNDK, SYMC, TMTA, TXCC, UTEK are
just some of the announcers. There is literally so much data that
the markets will be in overload but the trend will be the key. If
the trend tomorrow follows the trend tonight then the last weeks
rally will be ancient history.

The biggest wild card here is the October bottom scenario. October
has been the bottom and the end to so many bear markets that the
trend to buy weakness in October is firmly entrenched. Yes, we
will see some profit taking tomorrow. Yes, we are very likely to
get more bad news than good this week. The key will be how much
bad news is already priced into the current bear market. We all
know if the bulls want to buy, all the bad fundamental news in the 
world will not slow them down. They will buy any dip and make up
reasons for doing so. We also have the "best six-month" crowd that
buys the October dips and sells the April highs. They are so 
ingrained into buying the dip and being strongly rewarded that 
we have almost no chance of ending October any lower than the Dow
7200 we saw last week. 

As traders we need to be aware of the historical patterns and be
prepared. That means any dip we see tomorrow could last one day or
it could last a couple weeks but it should not last more than that.
We need to be ready to buy a rebound from this dip and ride the 
wave. I am not saying that wave will carry into 2003. It will 
only last until the buyers run out of money. This may only last 
a couple weeks. Once the shorts cover and the bulls finish buying 
the fundamentals will once again become important. Economic 
reports will become key again. The strength of the holiday 
shopping season will assume serious importance and its impact 
on the 4Q GDP. With no pickup in IT spending and retail PC sales
trending to the very low cost models the outlook is still grim. 
Unless this changes soon any October bounce will run smack dab 
into a November decline. 

What is the difference between these two charts?

Dow Rallies Chart



The first rally was July of this year. The Dow rallied +1250 points
off its lows in four days before dropping -750 points several days
later as the earnings pictures became clear. 

Dow Scenario Chart


If you take the current identical rally through Oct-15th and 
overlay the current chart calendar over the July history then 
it makes a very good representation of how October/November 
could play out. Even the numbers, with Dow 9000 being the top, 
all fit my possible profit taking, rebound and possible decline
perfectly. Remember, this is just one of several possible 
scenarios but it will be very interesting to see if it plays 
out. 

I would continue to expect some profit taking followed by another
bounce but be wary of the market after that. A real end to this 
bear market will require a bounce and hold over Dow 9000 and there 
is significant resistance between today's close of 8250 and that 
level. With +1000 Dow points in four days we are walking on 
quicksand toward any continued rally. Without some base building 
over the next several days we will be hastening the markets demise. 

Enter Very Passively, Exit Very Aggressively!

Jim Brown
Editor


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

Out of Steam

by Steven Price

Well, now, wasn't that nice?  A 1000-point rally in four days.  
Makes me almost bullish - almost.  Actually, if the rally had put 
on 300-500 points in four days, I might still be bullish.  
However, we have rallied furiously, first on no news, then on 
earnings that were "not bad."  In fact we rallied right up to 
significant resistance around 8300.  I mentioned in last night's 
market Wrap that 8350 was probably the next stop if we made it 
past 8000.  We got there much faster than I thought, as shorts 
seemed worried after a round of decent earnings reports.    While 
I'm starting to believe, based on the selling in the bond market, 
that we may have found some real buyers the last few days, the 
massive rally looks overdone.  The fact that we are right back to 
a resistance point, after a rally that seems unsustainable, tells 
me we should see some selling tomorrow.  

A look at the 5-year and 10-year Treasury note yields shows that 
they have run right up against their 50-day moving averages, as 
has the Dow.  The Dow's 50-dma of 8282, coincides closely with 
the previous support level of 8305, which coincides with the head 
and shoulders neckline breakdown in September, which coincides 
with the 50% retracement level (8304) of the trip up from July 24 
to August 22, which coincides with the 61.8% retracement level of 
the drop from August 22 to the low on October 10.  Phew!  As you 
can see, there is an awful lot going on just overhead. 

The fact that bonds have sold off shows that there has been an 
asset allocation into stocks.  That may indicate that we have 
found some sort of bottom in the market.  However, unless we get 
some stellar earnings reports, any continuing massive rally will 
be founded on very little but hope.  Much like the guesswork that 
was being done during the internet rally of the 1990s.   The 
problem is that as we head into earnings season, expectations 
have been dialed down so far that the euphoria over a company 
beating estimates needs to give way to perspective.   When we 
finally see a stream of steadily increasing earnings from stocks 
that aren't cooking the books, confidence will creep back in and 
the stock market can return to higher values as businesses 
increase their values.   However, when a stock like GM gains 10% 
in a day because it beat estimates, in spite of huge pension 
liabilities and problems with their Fiat acquisition, the 
euphoria seems more than a little overdone. 

Another interesting development today was the semiconductor 
sector.  The Semiconductor Index (SOX.X) finally broke out of its 
recent descending channel and at the same time broke the bearish 
pattern of lower highs on each rebound attempt.  The index closed 
at 269.10, well above the recent high of 256.45.  After the bell, 
Novellus beat estimates, but issued cautious comments about the 
fourth quarter.  RF Micro Devices also beat estimates, but raised 
guidance for the fourth quarter.  The big daddy of them all, 
however, shut out the lights on the day's party.  Intel, the 
world's largest chipmaker, missed forecasts by 2 cents per share 
and sent the semis south after hours.  Intel had previously 
revised revenue guidance, which they met, but said little about 
earnings.  Now we know why. It will be interesting to see how the 
sector responds, after breaking some important technical barriers 
today. Unfortunately, it looks like we will have to wait for the 
cake. 

Look for a market pullback tomorrow, but keep in mind that the 
bond market is indicating some actual strength behind the rally.  
It will be hard to maintain any rally without help from the tech 
sector, and Intel isn't giving us any help.  However, Microsoft 
reports later this week, and if they can post decent numbers, 
that may be the medicine we need to find a higher low on the 
pullback. 

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

Market Averages

DJIA ($INDU)

52-week High: 10679
52-week Low :  7286
Current     :  8255

Moving Averages:
(Simple)

 10-dma: 7672
 50-dma: 8282
200-dma: 9400

S&P 500 ($SPX)

52-week High: 1176
52-week Low :  775
Current     :  881

Moving Averages:
(Simple)

 10-dma:  816
 50-dma:  877
200-dma: 1019

Nasdaq-100 ($NDX)

52-week High: 1734
52-week Low :  795
Current     :  950

Moving Averages:
(Simple)

 10-dma:  951
 50-dma:  914
200-dma: 1206

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

The Semiconductor Index (SOX.X): The index finally broke its 
trend of lower highs, with today's rally to 269.10.  It also 
broke out of its descending channel and gave investors something 
to cheer.  Not so fast, however.  After the bell, Intel missed 
earnings and the chip stocks were already trading significantly 
lower after hours.  It looks like we will be right back into that 
channel tomorrow morning, but the first signs of a trend break 
seem to be in place.
  
52-week High: 657
52-week Low : 214
Current     : 269

Moving Averages:
(Simple)

 10-dma: 234
 50-dma: 282
200-dma: 446

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

Market Volatility

A 1000-point rally was all that was required to break 40 to the 
downside in the VIX.  However, 39.74 isn't breaking it by much. 
We broke through significant resistance levels, but actually got 
right up to another, due to the extent of the rally.  With 
resistance between 8275 and 8375 looming just above, based on 
retracement levels and prior support, the VIX may be back over 40 
by the open on a pullback. Last week's break of 50 signaled the 
massive rally, however, traders remember the levels we saw just 
four days ago and will be quick to raise premiums at any hint of 
a fall. 


CBOE Market Volatility Index (VIX) = 39.74 -2.87
Nasdaq-100 Volatility Index  (VXN) = 56.37 -2.71

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

          Put/Call Ratio  Call Volume   Put Volume

Total          0.78      1,070,910       838,647
Equity Only    0.54        776,894       420,320
OEX            1.14         65,425        74,786
QQQ            0.75         94,491        71,221

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

Bullish Percent Data

           Current   Change   Status
NYSE          30      + 4     Bull Correction
NASDAQ-100    38      +16     Bull Alert
Dow Indust.   37      +24     Bull Confirmed
S&P 500       33      +11     Bull Alert
S&P 100       36      +16     Bull Alert

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   0.59
10-Day Arms Index  1.05
21-Day Arms Index  1.31
55-Day Arms Index  1.31

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

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

Market Internals

        Advancers     Decliners
NYSE       2195           589
NASDAQ     2459           797

        New Highs      New Lows
NYSE         33              72
NASDAQ       32             125

        Volume (in millions)
NYSE     2,175
NASDAQ   1,990


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

Commitments Of Traders Report: 10/08/02

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

INSERT COMMENTARY HERE


Commercials   Long      Short      Net     % Of OI 
09/17/02      476,224   503,268   (27,044)   (2.7%)
09/24/02      425,276   442,661   (17,385)   (2.0%)
10/01/02      423,661   440,133   (16,472)   (1.9%)
10/08/02      427,070   445,135   (18,065)   (2.1%)

Most bearish reading of the year: (111,956) -   3/6/02
Most bullish reading of the year: ( 16,472) - 10/01/02

Small Traders Long      Short      Net     % of OI
09/17/02      182,243   116,377    64,866     21.7%
09/24/02      124,232    73,506    50,726     25.7%
10/01/02      123,371    74,704    48,667     24.5%
10/08/02      131,486    81,010    50,476     23.7%

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

INSERT COMMENTARY HERE


Commercials   Long      Short      Net     % of OI 
09/17/02       72,522     75,815    (3,293) ( 2.2%)
09/24/02       46,637     54,613    (7,976) ( 7.9%)
10/01/02       46,000     52,976    (6,976) ( 7.0%)
10/08/02       45,384     55,504   (10,120) (10.0%)

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
09/17/02       15,288    14,142     1,146     3.9%
09/24/02       11,163     9,421     1,742     8.5%
10/01/02       11,896     9,575     2,321    10.8%
10/08/02       10,735     5,721     5,014    30.4%

Most bearish reading of the year: (10,769) - 06/11/02
Most bullish reading of the year:   8,460  -  3/13/02

DOW JONES INDUSTRIAL

INSERT COMMENTARY HERE 


Commercials   Long      Short      Net     % of OI
09/17/02       26,863    21,187    5,676      11.8%
09/24/02       18,951    10,074    8,877      30.6%
10/01/02       18,969     8,903   10,066      36.1%
10/08/02       19,550    11,823    7,727      24.6%

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
09/17/02       13,393    11,637     1,756      7.0%
09/24/02        7,939     9,453    (1,514)   ( 8.7%)
10/01/02        6,809    10,503    (3,694)   (21.3%)
10/08/02        7,890     9,645    (1,755)   (10.0%)

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

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


===============
PLAY-of-the-Day  ((new BEARISH non-tech play))
===============

Allergan Inc. - AGN - cls: 58.98 chg: -1.22 stop: 62.26

Company Description:
Allergan, Inc., with headquarters in Irvine, California, is a 
technology-driven, global health care company providing eye care 
and specialty pharmaceutical products worldwide. Allergan 
develops and commercializes products in the eye care, 
neuromodulator and skin care markets that deliver value to our 
customers, satisfy unmet medical needs, and improve patients' 
lives.  (source: company press release)

Why We Like It:
When it comes to finding potential action points, regression 
channels are one of the most useful tools in any trader's tool 
kit.  Stocks that are bouncing off the top or bottom of a channel 
can provide a great risk/reward ratio, because it's easy to gauge 
stop placements and profit objectives.  Allergan provides a 
perfect example.  The stock has been trading in a wide descending 
channel since April.  Shares rebounded from the channel's bottom 
in late-September after S&P gave positive ratings to the 
company's debt, and they continued higher over the past week amid 
a very bullish climate for equities.  From the September 24th low 
to today's high, AGN gained roughly 25%.  That's a very 
impressive uptrend, but we believe the bulls have run out of 
steam.  Today's trading looks like a classic reversal.  AGN moved 
to a new relative high this morning and then proceeded to fall 
steadily lower for most the session.  Just check out that 5-
minute chart...UG-LY!  This sell-off nearly created a bearish 
engulfing candlestick on the daily chart.  Staying on the same 
time interval, we see that the stochastics (5,3,3 setting) are 
beginning to fall from the overbought extreme.  The MACD also 
looks like it could soon begin to roll over.  Furthermore, the 
point-and-figure chart shows that shares were unable to remain 
above bearish resistance.  These negative technical developments 
coincide with AGN's failed attempt to break above the top of its 
channel.  

Additionally, we're expecting this play to be helped along by a 
pullback in the broader market.  The Dow Jones has rallied up to 
several coinciding levels of resistance and looks ripe for a 
pullback after gaining 1000 points in less than a week. (For more 
on the Dow, check out the new DIA short.)  Overall it looks like 
it would take some unforeseen positive news from AGN to keep 
shares from dropping.  We're hypothetically short at current 
levels, with a stop at $62.26.  This will give us the protection 
of the 200-dma at $62.23.  Our goal is to ride AGN down to the 
$50.00 region.  Possible support lies at the 50-dma ($56.14), but 
we don't expect more than a small bounce from that level.  FYI, 
Allergan reports earnings next Thursday.  We'll probably close 
this play ahead of the announcement.


Click here for an annotated chart of AGN:



Picked on October 15th at $58.98
Results since picked:      +0.00
Earnings Date           10/24/02 (unconfirmed)
 






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

PremierInvestor.net Newsletter                  Tuesday 10-15-2002
                                                    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
  Closed Bullish Plays:  VZ

Stock Bottom / Active Trader
  New Bearish Plays:     AGN, DIA, MAR
  Bullish Play Updates:  SHFL
  Closed Bullish Plays:  ACV, ITMN

High Risk/Reward
  New Bearish Plays:     YHOO

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 Closed Plays
===============

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

Verizon Comm. - VZ - cls: 35.10 chg: +0.39 stop: 32.74

Hmmm...Looks like VZ might be running out of momentum.  Shares 
finished in the green on Tuesday, but the 1.1% gain is far from 
impressive considering the 5.0% rally in the NASDAQ.  It was 
especially frustrating to see related stocks such as NOK, QCOM, 
SBC, and T post sizeable gains while VZ wasn't even able to break 
above Monday's high.  This relative weakness is a sign that 
shares may continue to consolidate in the $33-$35 range.  Rather 
than challenge VZ with a tight stop, we've elected to drop this 
play as of today's closing price.  A pullback to the 50-dma near 
$31.00 might provide another bullish entry point, but for now 
we'll take our hypothetical profit of 5.8% and move on to the 
next high-odds play.  Traders who are bullish on the wireless 
group might want to keep an eye on QCOM.  The stock has broken 
above resistance and is trading at multi-month highs.  Shares are 
looking overextended, but a bounce from the 200-dma might provide 
a bullish entry point.

Picked on October 10th at $33.16
Results since picked:      +1.94
Earnings Date           10/29/02 (confirmed)
 





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

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

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

Allergan Inc. - AGN - cls: 58.98 chg: -1.22 stop: 62.26

Company Description:
Allergan, Inc., with headquarters in Irvine, California, is a 
technology-driven, global health care company providing eye care 
and specialty pharmaceutical products worldwide. Allergan 
develops and commercializes products in the eye care, 
neuromodulator and skin care markets that deliver value to our 
customers, satisfy unmet medical needs, and improve patients' 
lives.  (source: company press release)

Why We Like It:
When it comes to finding potential action points, regression 
channels are one of the most useful tools in any trader's tool 
kit.  Stocks that are bouncing off the top or bottom of a channel 
can provide a great risk/reward ratio, because it's easy to gauge 
stop placements and profit objectives.  Allergan provides a 
perfect example.  The stock has been trading in a wide descending 
channel since April.  Shares rebounded from the channel's bottom 
in late-September after S&P gave positive ratings to the 
company's debt, and they continued higher over the past week amid 
a very bullish climate for equities.  From the September 24th low 
to today's high, AGN gained roughly 25%.  That's a very 
impressive uptrend, but we believe the bulls have run out of 
steam.  Today's trading looks like a classic reversal.  AGN moved 
to a new relative high this morning and then proceeded to fall 
steadily lower for most the session.  Just check out that 5-
minute chart...UG-LY!  This sell-off nearly created a bearish 
engulfing candlestick on the daily chart.  Staying on the same 
time interval, we see that the stochastics (5,3,3 setting) are 
beginning to fall from the overbought extreme.  The MACD also 
looks like it could soon begin to roll over.  Furthermore, the 
point-and-figure chart shows that shares were unable to remain 
above bearish resistance.  These negative technical developments 
coincide with AGN's failed attempt to break above the top of its 
channel.  

Additionally, we're expecting this play to be helped along by a 
pullback in the broader market.  The Dow Jones has rallied up to 
several coinciding levels of resistance and looks ripe for a 
pullback after gaining 1000 points in less than a week. (For more 
on the Dow, check out the new DIA short.)  Overall it looks like 
it would take some unforeseen positive news from AGN to keep 
shares from dropping.  We're hypothetically short at current 
levels, with a stop at $62.26.  This will give us the protection 
of the 200-dma at $62.23.  Our goal is to ride AGN down to the 
$50.00 region.  Possible support lies at the 50-dma ($56.14), but 
we don't expect more than a small bounce from that level.  FYI, 
Allergan reports earnings next Thursday.  We'll probably close 
this play ahead of the announcement.


Click here for an annotated chart of AGN:



Picked on October 15th at $58.98
Results since picked:      +0.00
Earnings Date           10/24/02 (unconfirmed)
 



--- 

Diamonds - DIA - close: 82.80 chg: +3.86 stop: 85.01

Company Description:
The Diamonds Trust is a Dow Jones tracking stock that is traded 
on the AMEX.  Options are available for interested traders.

Why We Like It:
This is a pretty simple play.  The Dow Jones Industrial Average 
is up approximately 1000 points from its lows four days ago.  
Almost the entire move has been fueled by short-covering and 
those traders who have been buying the move are looking at a lot 
of short-term profits.  The nature of the market hasn't changed.  
We're still in a negative earnings environment despite companies 
meeting or beating the dramatically lowered earnings estimates.  
The combination of a 1000 point rally without relief followed up 
by a very poor earnings report by Intel this evening after the 
close looks like an excellent recipe for some consolidation in 
the major averages (a.k.a. the market is going to pull back 
soon).

Originally, we conceived this play before the Intel news and had 
expected a little bullish follow through tomorrow morning.  We 
had envisioned the market continuing higher until the DJIA traded 
near the 8300 level (about 50 points higher) before rolling over 
and losing strength.  Now that Intel has announced its third 
quarter numbers and missed its earnings estimates the broader 
averages might actually start the day in the red and move from 
there.  

Intel is a DJIA component who announced after the bell this 
evening.  The company met the street's revenue goal of $6.5B but 
missed the earnings estimate of 13 cents with an 11 cent result, 
which is excluding charges.  The company also cut its capital 
expenditure plans again while profit margins fell to the lower 
end of its estimates.  Going forward Intel said that the fourth 
quarter, typically its strongest, would see flat to 6% growth in 
revenues.  This is not a bullish indicator for the rest of the 
year.

On top of this negative Intel news the Dow Industrials will also 
have JPM, KO, HON, CAT, which are all components, announce 
tomorrow morning.  Odds are good of seeing a sell-the-news no 
matter what the numbers are.  Plus, there is concern over BA's 
report due out tomorrow and many expect bad news from IBM who is 
due to report after the bell on Wednesday.

Our plan to capture any move in the Industrials will be through 
the Diamonds (DIA).  The DIA has rallied from a low of 72 to 
today's high of 82.80, which is just below the 50-dma.  We are 
going to start the play with a stop at $85.01 but more 
conservative traders could probably get away with something 
tighter should the index open lower on Wednesday.  There is 
potential support at the 80 (or 8000) level but our short-term 
profit target will be a five point move.  

Annotated chart on the DIA



Picked on October 15th at $82.80
Results since picked:      +0.00
Earnings Date           xx/xx/xx 




--- 

Marriott Inc - MAR - close: 30.74 chg: +1.72 stop: 32.01

Company Description:
MARRIOTT INTERNATIONAL, INC., a leading worldwide hospitality 
company celebrating its 75th Anniversary in 2002, has over 2,600 
operating units in the United States and 65 other countries and 
territories. Marriott International operates and franchises 
hotels under the Marriott, JW Marriott, The Ritz-Carlton, 
Renaissance, Residence Inn, Courtyard, TownePlace Suites, 
Fairfield Inn, SpringHill Suites and Ramada International brand 
names; develops and operates vacation ownership resorts under the 
Marriott Vacation Club International, Horizons, The Ritz-Carlton 
Club and Marriott Grand Residence Club brands; operates Marriott 
Executive Apartments; provides furnished corporate housing 
through its Marriott ExecuStay division; and operates conference 
centers. Other Marriott businesses include senior living 
communities and services, and wholesale food distribution. The 
company is headquartered in Washington, D.C., and has 
approximately 144,000 employees. In fiscal year 2001, Marriott 
International reported systemwide sales of $20 billion.
(source: company press release)

Why We Like It:
Contrary to what the technical indicators may be telling us we 
think shares of MAR look like a short (bearish) play.  The stock 
has risen strongly with the market rebound from the bottom of its 
descending channel.  Today's market strength has put the stock 
directly under the upper band of this descending channel and to 
us the best place to short a stock is at resistance.  This allows 
for an enticing risk-reward ratio.  Chart readers can see the 
trend on the daily chart and shares closed just underneath their 
50-dma.  Today's trading action also appeared to form a potential 
bearish reversal pattern with a "hanging man" candlestick.  

As we were looking into the recent news events for MAR we 
uncovered some interesting headlines.  In late September the 
company had affirmed their Q3 earnings guidance.  On September 
30th CFSB cut their price targets on two hotels and MAR's price 
target was lowered from $38 to $33.  October 3rd was MAR's third 
quarter earnings report and the company appeared to beat 
estimates.  Excluding charges, MAR earned 46 cents a share versus 
the street estimates for 42 cents.  Not bad.  A 4-cent blow out 
should have caused some short-covering or renewed buying 
interesting.  Unfortunately, the stock continued to sink.  The 
next few days saw more downgrades and more news articles about 
investors and analysts expressing both their confusion and 
frustration over MAR's joint venture involving the Courtyard by 
Marriott chain.  Some even referred to it as an "off-balance 
sheet entity" which sort of casts an Enron-like shadow over the 
company's accounting.  So far MAR has not yet "come clean" over 
their Courtyard involvement and investors continue to question 
the integrity of MAR's accounting principles.  Considering these 
events we see the rally from $26.40 to almost $31 as pure short-
covering and not something that will last.

However, to protect us from an irrational or illogical market 
we're going to use a stop loss at $32.01.  MAR will have to trade 
above both its 50-dma and break the $32 barrier before we're 
stopped out.  At this point our risk is about $1.26 while our 
downside target is $27.50, which is about $1 off the recent lows.  
More conservative traders who also like MAR short could alter 
their approach two ways.  One could wait for MAR to trade back 
under the $30 level before initiating a short position or one 
could use a much tighter stop loss and with the 50-dma currently 
at 31.08, something just north of there might work out.

Annotated Chart - MAR



Picked on October 15th at $30.74
Results since picked:      +0.00
Earnings Date           10/03/02 (confirmed)





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

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

Shuffle Master - SHFL - cls: 21.08 chg: +0.13 stop: 19.74 *new* 

The first half-hour of Tuesday's session was quite exciting for 
shareholders of SHFL.  The stock gapped higher with the broader 
market and quickly reached an intraday high of $22.74.  
Unfortunately it was mostly downhill after that, as shares closed 
near the lows of the day and finished with a gain of just 13 
cents.  It would've been nice to see SHFL maintain its early-
morning gains, but the stock may have been due for a pullback 
after rising 21% in just three days.  The technical picture 
continues to look positive, with the oscillators trending higher 
and point-and-figure chart displaying an ascending triple-top 
breakout.  In light of this strength, traders looking to open new 
positions could watch for a pullback to $20.50.  We believe 
previous resistance at $20.00 will now provide support.  Our stop 
is set at $19.74, just under yesterday's low. 

Picked on October 14th at $20.36 
Gain since picked:         +0.72
Earnings Date           08/22/02 (confirmed)





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

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

Alberto Culver - ACV - close: 51.25 change: +0.07 stop: 48.49

We hate to drop this play after just two days, but shares just 
aren't showing enough upside movement. Granted, the stock did 
reach a new relative high on Tuesday.  But shares finished with a 
paltry seven-cent gain.  Come on, ACV...Only seven cents on a day 
when the Dow Jones gained nearly 378 points?!  We had anticipated 
a much more enthusiastic rally when we added this play.  With the 
Dow up 1000 points over the past four sessions, odds of a broader 
market pullback look pretty high.  The recent relative weakness 
suggests that shares could retrace last week's gains and move 
back to the $49-$50 area.  We're going to close this paper trade 
as of today's close, for a net loss of seven cents.  The multi-
month uptrend is still intact, but at this point the stock just 
isn't attracting enough buying interest to warrant a long 
position.

Picked on October 11th at $51.32 
Gain since picked:         -0.07
Earnings Date           10/24/02 (confirmed)




---

InterMune Inc - ITMN - cls: 35.50 chg: +1.29 stop: 32.99

Better-than-expected earnings from Dow components GM, JNJ, and C 
had the broader market powering higher on Tuesday morning.  ITMN 
also opened strong and gapped well above the $35.00 resistance 
level.  The positive earnings from JNJ must've not been very 
palatable for the bears, but what really got the stock moving was 
Banc of America, who started coverage on InterMune with a "Strong 
Buy" rating.  ITMN opened above our exit target, so this play was 
closed at the opening trade of $35.28.  Nimble traders may have 
been able to close positions at an even higher level.  Shares 
reached an intraday high of $37.20 less than two hours after the 
opening bell.  With this paper trade netting a gain of 12.3%, 
we'll bid ITMN a fond goodbye.  Today's action has cleared the 
way for an eventual test of the $40.00 region, but the bulls will 
first have to contend with possible resistance at $38.00.  The 
fact that shares closed near the lows of the day indicates that 
shares may move down to fill in this morning's gap.

Picked on October 8th at $31.39
Results since picked:     +3.89
Earnings Date          10/23/02 (unconfirmed)






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

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

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

Yahoo! Inc. - YHOO - cls: 14.42 chg: +0.16 stop: 15.26

Company Description:
Yahoo! Inc. is a leading provider of comprehensive online 
products and services to consumers and businesses worldwide. 
Yahoo! is the No. 1 Internet brand globally and the most 
trafficked Internet destination worldwide. Headquartered in 
Sunnyvale, Calif., Yahoo!'s global network includes 25 World 
properties and is available in 13 languages.
(source: company press release)

Why We Like It:
One might be asking "How can PremierInvestor.net be recommending 
a short (bearish) play on YHOO after its incredible earnings 
report last week?"  That's a good question.  YHOO did report its 
third quarter earnings on October 9th and the company beat 
analysts estimates of 4-cents a share by a penny.  The company 
had been estimated to turn in $239.2M in sales.  When the numbers 
came out the company actually announced revenues of $248.8M.  
This was a 50% increase from the previous year.  However, had 
YHOO not purchased HotJobs.com recently their revenues numbers 
would only have climbed 36%.  That's still a hefty increase in 
revenues and not many companies on Wall Street can claim this 
sort of growth.  On top of their earnings report YHOO also raised 
their revenue estimates for their 2002 forecasts from $900M-$940M 
to $930M-$955M.  

This is all well and good and considering the state of the 
economy we're encouraged by anyone willing to raise their 
revenues estimates.  What concerns us are two issues.  Number 
one, the belief that online advertising is coming back is not 
shared by all media analysts.  There is a growing consensus that 
the online ad world may have bottomed but there are still nay 
sayers predicting an 8% drop next year.  Second, we just don't 
see how this market environment can support a P/E ratio higher 
than 160 as is YHOO's.  Yes, the company is gaining market share 
in the online ad world.  Yes, they are doing a better job at 
widening their revenues stream from just advertising to 
additional fee-based services.  But no, we don't believe that 
after a 1,000 point gain in the Dow Jones, a 170+ gain in the 
Nasdaq composite and a 60% gain in shares of YHOO that this is 
the time and place for investors to be initiating long positions 
in the stock.  Shares have rallied strongly and on strong volume 
but we believe the failure at the $15 level, which coincided with 
the nearby 200-dma (14.85) is a great opportunity to short any 
profit taking that is likely to occur.

We are suggesting a short at current levels with a stop at 
$15.26, just a few cents above today's high.  Those traders 
willing to handle a wider stop might consider using the $15.51 
mark as a possible stop loss.  YHOO has been very volatile and 
thus we're placing it in the high-risk/reward section and is 
probably not suitable for all traders.  More conservative traders 
willing to consider the play might want to wait for YHOO to trade 
under the $14 level before looking to initiate short positions.  
Keep in mind that our short-term target is the $12.00 area but we 
would not be surprised to see the stock trade towards its 50-dma 
intraday (currently the 50-dma is 10.83).

Annotated chart for YHOO



Picked on October 15th at $14.42 
Results since picked:      +0.00
Earnings Date           10/09/02 (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 

RKY     Adolph Coors               62.28     +1.38
PPD     Pre-Paid Legal             19.73     +1.07
ESE     Esco Technologies          34.78     +1.38
XTO     Xto Energy                 21.93     +1.00
GCO     Genesco Inc                13.02     +0.62
BGP     Borders Group              17.50     +0.91

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

UNT     Unit Corp                  19.85     +1.46
ZRAN    Zoran Corp                 12.04     +1.33
DAL     Delta Airlines              9.09     +1.59
TRR     TRC Companies              15.50     +1.62
RL      Polo Ralph Lauren          18.85     +1.36
HPQ     Hewlett-Packard            13.50     +1.28

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

CVH     Coventry Healthcare        37.25     +1.25
MRK     Merck & Co                 50.88     +1.28
AXP     American Express           33.72     +2.62
NCEN    New Century Fncl.          20.94     +2.83
YELL    Yellow Corp                30.61     +2.14
MDP     Meredith Corp              45.52     +1.47
AG      Agco Corp                  25.60     +1.84

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

SONC    Sonic Corp                 22.13     -2.88
TTWO    Take-Two Interactive       27.39     -1.56
PNR     Pentair Inc                32.50     -3.07
BEC     Beckman Coulter            28.42     -8.71
POOL    SCP Pool Corp              25.71     -1.22
UDI     United Defense             20.18     -2.12

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

KOS     Structured Products        24.80     -0.80




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