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Daily Newsletter, Thursday, 10/17/2002

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PremierInvestor.net Newsletter                 Thursday 10-17-2002
                                                    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:      Earnings Shell Game Continues
Play-of-the-Day:  An Intriguing Channel
Market Sentiment: Catching A Wave


************************************************************
MARKET WRAP  (view in courier font for table alignment)
************************************************************
      10-17-2002           High     Low     Volume Advance/Decline
DJIA     8274.89 +238.90  8318.45  8038.24 2.09 bln   2235/1000
NASDAQ   1272.29 + 39.90  1283.21  1263.46 1.77 bln   2467/ 956
S&P 100   446.21 + 10.02   450.28   436.19   Totals   4702/1956 
S&P 500   879.20 + 19.18   885.35   860.02 
RUS 2000  362.57 + 11.72   362.57   350.85 
DJ TRANS 2279.53 + 78.20  2283.36  2203.97   
VIX        40.16 -  1.81    41.37    39.74   
VXN        56.22 -  0.65    58.39    54.00
Total Vol   4,111M
Total UpVol 3,223M
Total DnVol   861M
52wk Highs    91
52wk Lows    239
TRIN        0.88
PUT/CALL    0.66
*************************************************************

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

Earnings Shell Game Continues

Winners, losers and snoozers were the standard of the day. The 
IBM earnings last night set the stage for a nine-minute rally
but the impact of its +7.30 gain lasted all day. Microsoft 
announced a huge earnings win after the bell and traded up 
+2.50 in after hours. SUNW beat estimates by two cents but 
warned that another -4000 would lose their jobs. 

Dow Chart


Nasdaq Chart


The big news was no news at all from IBM. They beat the street
and did not warn going forward. They were not positive but they
were not very negative either. Traders had been expecting some
trouble at IBM and there was obviously a lot of short positions. 
IBM roared to a +7.30 point gain and powered the Dow to +285
numbers at the open. 

The rally lasted all of nine minutes. We went from zero to +285
and crashed into the resistance wall at Dow 8300, OEX 450. The 
Dow dropped back to 8250 by 9:54 and then traded in a very 
narrow 50 point range for the rest of the day. 

Dow Intraday Chart


The hot news after the bell was the huge earnings win from 
Microsoft. Their 50 cent earnings beat estimates of 43 cents by
a mile. The reason was a one time last chance sale of software
licenses. Their old license plan changed as of June 30th and 
there was a rush to buy software at the old terms. They
beat the revenue number of $7.1 billion with $7.75 billion as
well. The key point here is that this is not a repeatable event. 
MSFT lowered their guidance for the 4Q to 45-46 cents and the 
street was expecting 50. That was ignored. The MSFT CFO said 
on the conference call that the "tech spending environment 
remains tough". The stock did bounce in after hours but only 
about $2.50 as traders realized that it was not from new 
business as much as just a change in sales methods.

Another tech heavyweight on a diet, SUNW, beat the street by two
cents but announced another round of layoffs. The company posted
a loss only one quarter after returning to a profit. They declined
to give expectations for the current quarter saying business had
"unexpectedly" failed to improve in September. CEO Scott McNealy
said "I am so far out of the forecasting game it does not even
make sense" when asked about his take on the business outlook. 
The CFO said they were not seeing the normal seasonal uptick in
purchases. SUNW said it would cut -4400 more jobs and take a $300
million charge in the next quarter. They said they were considering
cutting capex spending from $2 billion in 2002 to $500 million. 
Sounds like there is still trouble in tech land.

Adding to this consensus was an earnings miss by SEBL. They posted
earnings of 3 cents compared to estimates of 5 cents and guided 
analysts lower. It appears the software sector is still tough if 
you are not Microsoft. CHKP warned that earnings would fall below
estimates for the quarter. PSFT guided analysts to 14-15 cents when
analysts had expected 14 cents. They qualified it by saying it was
still very challenging to make predictions. Even EBAY guided 
analysts lower to 1.12-1.15 from analyst's estimates of 1.17. 
Gateway lowered its guidance for the next quarter to a loss of 
-10 to -13 cents when analysts were expecting only -9 cents. 

There was also a guidance warning from Broadcom. They are a major
supplier to Cisco and the immediate thought was that Cisco was in
trouble. In the conference call they said their networking chip
business was stable but weakness in the sales of set top boxes
was going to hold their sales flat in the 4Q. So Cisco may not be
in serious trouble but consumers are slowing down on TV equipment.
That touches an entirely different cord for the 4Q. 

The lowered guidance from BRCM as well as numerous other chip stocks
over the last several weeks was borne out in the book-to-bill number. 
The headline number came out at only .84 with a drop of -19% in the 
orders for September. This was the second month of decline after
seven months of increases. August bookings were also revised down. 
Getting to be a habit on the number circuit lately. In reality the
headline number of .84 is significantly wrong when painting the real
picture. The number is a three-month moving average and considering 
the last four months were 1.27 (May), 1.26, 1.22, 1.02 (Aug) to get
a three month average of .84 the current real number has got to be 
much lower. Since we do not know the real numbers for any month it
is hard to decipher how bad it was. I heard one analyst speculating 
that the September number may have been as low as 50. Here is the
source: http://www.semi.org/web/wpress.nsf/url/booktobill

The book-to-bill means for every $1.00 of orders shipped only 84 cents
of new orders (actually significantly less) were received in Sept. 
This would mean that excess capacity is stacking up and more capex
spending cuts are imminent. Excess capacity cost money and produces
no revenue and that impacts earnings. With the Intel warning, the 
SUNW admission that there was no business at the end of the quarter
the economy is not improving despite how bad everyone wants it. 

The Jobless Claims rose again this morning with the continuing 
claims rising to a 20 year high. There was an explosion of housing
starts, the highest since 1986, but there is not going to be anybody
with a job to buy the houses. Sears shocked everyone this morning
by missing numbers by 21 cents. These were the numbers they affirmed
just ten days ago. The problem was a larger than expected default 
rate from their credit card customers. They had to take a much
larger reserve charge due to a rapidly rising rate of consumer
bankruptcies. Capital One Financial said yesterday that they were
abandoning the sub prime credit market because of the rapidly
increasing credit risk. Think the consumer is going to rush to
the rescue in the 4Q? 
http://www.northerntrust.com/library/econ_research/weekly/us/020918.html

Need more proof? The Philadelphia Fed Survey came in with a drop to
-13.1 compared to estimates of a gain of 2.3. This indicates a rapid
contraction in the manufacturing sector. How many times do we have
to take the patients temperature before we agree that they are still
sick? The airline sector was represented by earnings from NWAC, CAL 
and LUV and it was not a pretty picture. Tomorrow DAL announces
earnings and they announced today they were cutting -8000 more jobs.

What will Friday bring? The futures are up +9.50 as I write this
but the semi stocks will not be impacted from the late book-to-bill 
report until tomorrow. Still I expect the markets to open up on
the strength of the Microsoft numbers as retail investors rush to
buy this huge win, oblivious to the fact that it is a one time event
and they lowered guidance for the 4Q. The Dow closed at 8271 and has
very strong resistance at 8300, 8350 and 8400. With MSFT in the Dow
we should get the mandatory morning gap which will be completely 
impossible to trade and then another pause for a direction check. 
With over 35% of the S&P announcing earnings this week and almost
all the major players there will not be the high visibility targets
of opportunity next week. This could pose a problem for traders
looking for new hope. Don't get me wrong. The October madness is
in full control. Fundamentals and economics don't count. The majority
of tech stocks are trading at nearly twice the PE that they had as
of Oct-2000 yet the economy is extremely worse. 

Surprised? QCOM at 236, MSFT at 40, INTC 49, and that is for 
companies that still have earnings. Something you might want to 
think about is that Oct-19th, 1987 the Dow dropped -22.6% in one
day. This is not 1987 and the chart comparisons are not even close 
but I bring it up to note that sudden changes in altitude tend to 
occur in the 2nd and 3rd weeks of October. Rebounds tend to occur 
in the last week. We are 2.5 weeks into the month with two weeks 
to go and we got zero follow through from the opening bounce this
morning. That does not paint a pretty picture. 

Enter Very Passively, Exit Very Aggressively!

Jim Brown
Editor


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

Viacom Inc (Class B) - VIA.B - cls: 44.43 chg: +1.73 stop: *text*

Company Description:
Viacom is a leading global media company, with preeminent positions 
in broadcast and cable television, radio, outdoor advertising, and 
online. With programming that appeals to audiences in every 
demographic category across virtually all media, the company is a 
leader in the creation, promotion, and distribution of entertainment, 
news, sports, and music. Viacom's well-known brands include CBS, MTV, 
Nickelodeon, VH1, BET, Paramount Pictures, Viacom Outdoor, Infinity, 
UPN, The New TNN, CMT: Country Music Television, Showtime, 
Blockbuster, and Simon & Schuster. (source: company press release)

Why We Like It:
Try as we might we were unable to find out what has been driving 
shares of Viacom higher.  Other than the general market 
enthusiasm, of course.  The stock had been stuck in a trading 
range but the bottom broke out when the Dow Jones Industrials was 
crashing two weeks ago.  Just as quickly the stock reversed 
course and now with the market rally it has been able to trade 
above recent resistance in the $44 level and its 200-dma.  
Unfortunately for shareholders there was additional resistance in 
a longer-term level at $45.00 and shares failed there today.  We 
can say that the MACD and stochastics look positive but with the 
expectation of a potential market pull back we are cautiously 
bullish on this play.  The plan would be to use a trigger to go 
long and only use a half position.  Our trigger will be $45.11.  
There is some congestion in the $47.50 area but our target to 
exit for a profit will be $49.90.  This is 10 cents below the 
overhead resistance at $50.  We did note in the news that back on 
October 10th Viacom had announced a new $3 billion stock buy back 
program that was to take affect as soon as they had completed 
their current $2 billion share buy back program.  

Traders should note that S&P futures are currently up due to the 
positive news from MSFT and this will likely cause the markets to 
open higher Friday morning.  Cautious traders may want to see if 
the rally can last past the first hour of trading before 
evaluating new positions.  We'll start the play with a stop at 
$41.94 and adjust it higher as the play progresses.

Annotated Chart - VIA.B




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





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

Catching A Wave

by Steven Price

The Dow rebound, on the heels of IBM's earning's surprise last 
night, stopped dead at the plethora of resistance between 8277 
and 8400.  These resistance levels included the 50-dma, two 
Fibonacci retracement levels (one from the previous rally) and a 
previous level of significant support (8305).  The bears got 
their meat, when it appeared there was a ceiling in place, but it 
looks like they may have to go back into hibernation after 
Microsoft (MSFT) blew away earnings estimates after the bell.   

There are some significant barriers overhead, but with Microsoft 
already up over $2 after hours, there is a good chance we will 
get through those levels.  I will be watching 8359 closely, as 
that is the last level of the significant resistance I see 
between where we closed and 8600. That is not to say my long-term 
market prognosis is rosy.  Lost among the bull stampede was this 
morning's weekly employment data, which showed an increase of 
22,000 jobless claims to 411,000 and was higher than estimates of 
398,000.  That number won't be helped any in the future by Delta 
Airlines, which announced plans to lay off up to 8,000 more 
workers, due to "dramatically lower demand for air travel" and 
"unprecedented financial losses."  Sun Microsystems is also 
laying of 4,400 workers, but more about that later. 

The airlines are still reeling, without much of a light at the 
end of the tunnel. Southwest Airlines actually reported a profit 
today, but said it could not predict whether it will earn a 
profit in the fourth quarter.  Continental, which lost 55 cents 
per share, said it had no prediction on when it could return to 
profitability.  Several airlines did get a boost today, but only 
because losses were narrower than expected.  For those flyers 
concerned with a possible United bankruptcy, I was assured today 
by a nameless, faceless voice at customer service that frequent 
flier miles would not be affected, for whatever that's worth. 

Additional economic data released this morning showed industrial 
output fell 0.1% in September, reflecting a drop in production of 
business equipment.  Businesses continue to cut spending to make 
up for lost revenue and that hasn't changed simply because 
companies are beating lowered earnings expectations. Drops in 
capacity utilization, manufacturing output, and mining output 
accompanied that decline. In August, total output dropped 0.3%, 
while manufacturing output fell 0.2%. 

Sun Microsystems (SUNW) beat expectations after the bell, by 
losing only 2 cents per share.  The company also announced job 
cuts of up to 4,400 workers, or 11% of its workforce. Sun said it 
would be lowering its capital expenditures for 2003 from 
approximately $2 billion in 2002, to under $500 million - a 
staggering 75% decline.  It appears that the host of companies 
complaining about IT spending are right on target when they say 
they don't see a turnaround any time soon.  However, what this 
tells me is that it will be at least 2004 before that turnaround 
occurs, as companies slash next year's budgets following this 
year's losses. 

There was some positive economic data, as housing starts jumped 
13% to the highest level in 16 years, and the highest percentage 
gain in 7 years.  The number of single-family homes started rose 
18% to 1.48 million, the highest level in 24 years. 

EBay beat earnings forecasts and showed listings up 47% over last 
year.  It also raised sales projections for the current quarter. 
However, its online transaction revenue increase was tempered by 
a 40% decline in revenue and the stock traded down $1.40 after 
hours.

Earnings season tends to hide internal economic data. That's not 
to say that no one is paying attention, but the "stories" are 
generally focused on who beat and who missed.  Don't lose sight 
of what's behind the curtain, as many companies are "beating" 
severely reduced forecasts. That doesn't mean the market won't 
swing higher on positive earnings reports.  As traders, all we 
really care about is making a profit, not being "right."  So 
catch the wave, but be ready to bail out when the music stops and 
basic economics kick back in.

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

Market Averages

DJIA ($INDU)

52-week High: 10679
52-week Low :  7286
Current     :  8275

Moving Averages:
(Simple)

 10-dma: 7754
 50-dma: 8270
200-dma: 9380

S&P 500 ($SPX)

52-week High: 1176
52-week Low :  775
Current     :  879

Moving Averages:
(Simple)

 10-dma:  825
 50-dma:  877
200-dma: 1016

Nasdaq-100 ($NDX)

52-week High: 1734
52-week Low :  795
Current     :  945

Moving Averages:
(Simple)

 10-dma:  868
 50-dma:  914
200-dma: 1199

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

The Semiconductor Index (SOX.X): I'm getting whiplash watching 
this group bounce around the last few days.  First we get bad 
news from Intel, then good news from QLogic.  The good news from 
IBM was really more about services making up for the drop in 
hardware, so I'll out that factor in the negative bin. I keep 
thinking back to Intel's cautious comments about the fourth 
quarter.  It will be awfully tough to overcome a rough quarter 
for the world's biggest chipmaker. Sun Micro said it was cutting 
cap ex by 75% next year, but Microsoft beat earnings and traded 
up over $2 after hours. While this may help lift the sector, 
MSFT's profits have come partially from long-term licensing 
agreements, rather than PC sales.  I can see the sector getting a 
lift tomorrow, but my long-term outlook is still negative until 
we see positive growth in PC sales or cap ex. 

52-week High: 657
52-week Low : 263
Current     : 266

Moving Averages:
(Simple)

 10-dma: 237
 50-dma: 280
200-dma: 443

-----------------------------------------------------------------
Market Volatility

Today's rally still didn't push the VIX below 40.  While another rally 
on the Microsoft earnings may do the trick, it's obvious that OEX traders 
still haven't completely bought into the rally.  When that happens, we'll 
see a diving VIX, but with earnings season in full swing, expect to see 
some premium support for a while.  Even a VIX in the 35 range is considered 
on the high end, so it could be a while before we return to "normal" 
levels in the 20s. 


CBOE Market Volatility Index (VIX) = 40.16 -1.81
Nasdaq-100 Volatility Index  (VXN) = 56.22 -0.65

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

          Put/Call Ratio  Call Volume   Put Volume

Total          0.66      1,103,799       729,719
Equity Only    0.52        781,618       409,163
OEX            1.14         58,139        66,199
QQQ            0.75        137,981       103,643

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

Bullish Percent Data

           Current   Change   Status
NYSE          31      + 1     Bull Correction
NASDAQ-100    41      + 3     Bull Alert
Dow Indust.   43      + 6     Bull Confirmed
S&P 500       37      + 4     Bull Alert
S&P 100       41      + 5     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   0.86
10-Day Arms Index  1.07
21-Day Arms Index  1.29
55-Day Arms Index  1.33

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       2048           713
NASDAQ     2363           894

        New Highs      New Lows
NYSE         35              74
NASDAQ       46             100

        Volume (in millions)
NYSE     2,073
NASDAQ   1,806

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

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

Commercials got shorter, as they increased both positions, by 
increased shorts by an additional 1600 contracts.  Small Traders 
also added significantly to both sides, but added an additional 
1800 contracts to the long side. 


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

Commercials increased short positions by 2,500 contracts, while 
reducing longs by 700.  Small traders reduced longs by 1,000, but 
reduced shorts by 4,000, getting decidedly longer.  


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

Commercials increased long positions slightly, and added 3,000
short contracts, reducing the net long position significantly. 
Small traders increased long positions by 1,000 contracts and 
lowered shorts by the same amount, reducing the net short position by 50%. 


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

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




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PremierInvestor.net Newsletter                 Thursday 10-17-2002
                                                    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:

Stock Bottom / Active Trader
  New Bullish Plays:     VIA.B
  New Bearish Plays:     TGT
  Bullish Play Updates:  SHFL
  Bearish Play Updates:  CMCSK, DIA, MAR
  Closed Bearish Plays:  AGN

High Risk/Reward
  Bullish Play Updates:  ORCL
  Bearish Play Updates:  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)
                         

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

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

  -----------------
  New Bullish Plays
  ----------------- 

Viacom Inc (Class B) - VIA.B - cls: 44.43 chg: +1.73 stop: *text*

Company Description:
Viacom is a leading global media company, with preeminent positions 
in broadcast and cable television, radio, outdoor advertising, and 
online. With programming that appeals to audiences in every 
demographic category across virtually all media, the company is a 
leader in the creation, promotion, and distribution of entertainment, 
news, sports, and music. Viacom's well-known brands include CBS, MTV, 
Nickelodeon, VH1, BET, Paramount Pictures, Viacom Outdoor, Infinity, 
UPN, The New TNN, CMT: Country Music Television, Showtime, 
Blockbuster, and Simon & Schuster. (source: company press release)

Why We Like It:
Try as we might we were unable to find out what has been driving 
shares of Viacom higher.  Other than the general market 
enthusiasm, of course.  The stock had been stuck in a trading 
range but the bottom broke out when the Dow Jones Industrials was 
crashing two weeks ago.  Just as quickly the stock reversed 
course and now with the market rally it has been able to trade 
above recent resistance in the $44 level and its 200-dma.  
Unfortunately for shareholders there was additional resistance in 
a longer-term level at $45.00 and shares failed there today.  We 
can say that the MACD and stochastics look positive but with the 
expectation of a potential market pull back we are cautiously 
bullish on this play.  The plan would be to use a trigger to go 
long and only use a half position.  Our trigger will be $45.11.  
There is some congestion in the $47.50 area but our target to 
exit for a profit will be $49.90.  This is 10 cents below the 
overhead resistance at $50.  We did note in the news that back on 
October 10th Viacom had announced a new $3 billion stock buy back 
program that was to take affect as soon as they had completed 
their current $2 billion share buy back program.  

Traders should note that S&P futures are currently up due to the 
positive news from MSFT and this will likely cause the markets to 
open higher Friday morning.  Cautious traders may want to see if 
the rally can last past the first hour of trading before 
evaluating new positions.  We'll start the play with a stop at 
$41.94 and adjust it higher as the play progresses.

Annotated Chart - VIA.B




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




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

Target Corp. - TGT - close: 29.51 change: -1.32 stop: *text*

Company Description:
Target Corporation operates large-store general merchandise 
formats, including discount stores, moderate-priced promotional 
and traditional department stores, as well as a direct mail and 
on-line business called target.direct. (source: company press 
release)

Why We Like It:
Our list of sector indices was predominantly green on Thursday, 
with only a handful of laggards posting losses.  The RLX.X retail 
index wound up in the latter category after a painful earnings 
miss from Sears provided investors with a fresh excuse to move 
out of the group.  S was annihilated today after the company 
posted a 28% decline in quarterly profits and warned that annual 
results would not meet expectations.  These estimates reduced 
just last week, but growing losses related to credit card debt 
have already made those numbers obsolete.  Q3 EPS was a stunning 
22 cents less than estimates.  

Target is less prone to credit defaults, but they still face the 
same challenges that have plagued all retailers...Namely, a 
bearish economic climate.  Evidence of this weakness was provided 
last week, when the company reported a reduction in September 
sales and trimmed its near-term outlook for sales and earnings.  
TGT traded as low as $24.90 on this news but managed to rebound 
sharply over the following three sessions.  With no noteworthy 
positive retail news emerging over the past week, this bounce 
looks a lot like your average, garden-variety short covering 
rally.  Technically, bears can be pleased with the way TGT rolled 
over below its 50-dma at $32.94.  The strong volume behind 
today's 4.2% decline shows a good amount of bearish conviction.  
We also like how the daily stochastics (5,3,3) are starting to 
fall from the overbought region.  The past four stochastics 
reversals (from the upper band) have heralded sell-offs.  By 
entering this paper trade on a move below today's low ($29.12), 
we're aiming to ride TGT down to our profit-target at $26.01.  
More aggressive traders can target (no pun intended) a retest of 
the relative lows near $25.00.  If we're triggered we'll use a 
stop at $30.85, one cent above today's high.  Traders looking for 
confirmation of sector weakness may want to make sure the RLX.X 
is below its 50-dma before initiating any positions.  On a 
related note, WMT is also looking bearish as the stock begins to 
rollover from its 200-dma.  Additional weakness in shares of the 
retail behemoth might weigh heavily on TGT.


Annotated Chart - TGT



Picked on October xxth at $xx.xx
Results since picked:      +0.00
Earnings Date           11/14/02 (unconfirmed)
 




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

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

Shuffle Master - SHFL - cls: 21.90 chg: +0.54 stop: 20.74 *new*

The past two sessions have been very encouraging for shareholders 
of SHFL.  On Tuesday the stock looked like it might pull back to 
the $20.00 region after posting a sizeable three-day gain.  
Yesterday's broader market sell-off provided an ideal climate for 
more profit taking.  However, the best the bears could manage was 
a brief dip under $21.00.  Shares finished the session solidly in 
the green.  That relative strength is a very good sign for our 
long play.  Today's action was also encouraging, as shares 
followed the Dow Jones higher and posted a new multi-month 
closing high.  The PI Newsletter is up 7.5% on this play, and 
short-term traders may want to consider taking profits at current 
levels.  We're eyeing an eventual rally to the April highs near 
$24.00.  Our official profit-target is just below this level at 
$23.94.  We've also raised our stop to $20.74, which should 
protect a small gain.  Aggressive traders can target new entries 
on a move above $22.03, but be aware that Tuesday's high of 
$22.74 may provide some resistance.

Picked on October 14th at $20.36 
Gain since picked:         +1.54
Earnings Date           08/22/02 (confirmed)




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

Comcast Corp. - CMCSK - close: 21.40 change: +0.98 stop: *text*

Today's broad-based equity rally helped CMCSK tack on 5.0%.  
Shares pierced the top of the descending channel and moved above 
the 50-dma on an intraday basis.  The stock never fell under 
Wednesday's low, so this play remains inactive.  Overall we think 
the technical picture is still looking weak.  Today's rollover 
from whole-number resistance at $22.00 and the 50-dma ($21.68) 
indicates that the stock be getting top-heavy at current levels.  
After-hours news could also help the bears on Friday.  Set-top 
box maker SFA reported tonight that decreased spending from cable 
operators had resulted in a lower-than-expected Q1 profit.  This 
implies that customers such as CMCSK are seeing less demand.  
With this in mind, we're making the following adjustments: Our 
trigger for entering this short play is now located at $20.99, 
six cents under today's low.  If triggered, we'll use a stop at 
$22.51.  More conservative traders may want to wait for shares to 
reach our original action point at $20.20.

Picked on October xxth at $xx.xx
Results since picked:      +0.00
Earnings Date           10/28/02 (unconfirmed)
 



--- 

Diamonds - DIA - close: 82.84 chg: +2.04 stop: 85.01

The market volatility continues to be amazing!  The broader 
indices pulled back on Wednesday as we expected them to and our 
bearish short play in the Diamonds was looking great.  Then IBM's 
positive earnings report, well at least more positive than Wall 
Street was expecting, surprised everyone.  IBM, a Dow Jones 
Industrials component, was trading up several points after hours 
on Wednesday night.  We knew this would cause the Industrials to 
open higher but it was unknown if the rally would hold or if 
traders would sell it.  The DIA opened at 83.34, quickly hit its 
high for the day, 83.79, and then traded sideways throughout the 
remainder of the session.  This was very unusual.  It was if the 
markets decided to hold on and see what sort of results Microsoft 
(MSFT), another Dow component, would say in their earnings report 
after tonight's close.  Now that MSFT has crushed the earnings 
estimates by beating by 7 to 12 cents more than expected 
(depending on who you listen to) this will propel the markets 
higher yet again for Friday's open.  However, the question 
remains, after such an incredible rebound of 1000 points, we're 
heading into the weekend, and it's options expiration...will 
traders be able to resist the sell-the-rally urge?  The Dow Jones 
Industrials appears to have a lot of resistance between 8300 and 
8500 but all it takes is an intraday rally to 8500 and we'll be 
stopped out of our play.  We don't think the rally can hold 
without some significant profit taking.  A 50% retracement of the 
recent move would be a 500 point pull back.  Despite this bias 
for a pull back we would not be looking to initiate new bearish 
positions until we can see how the markets trade heading into 
Friday afternoon.  If the DIA begins to slip back under the 82 
mark then we'll probably consider new short positions.  Otherwise 
a wait and see approach is probably best.

Picked on October 15th at $82.80
Results since picked:      -0.04
Earnings Date           xx/xx/xx 




---

Marriott Inc - MAR - close: 30.40 chg: +0.72 stop: 32.01

Shares of MAR traded very similarly to the markets.  The stock 
began to drop from its short-term overbought state and the close 
on Wednesday below the $30 level looked very encouraging for the 
rest of the week.  The surprise by IBM last night and the market 
pop this morning sent shares of MAR as high as 31.25 before 
selling began to resume.  MAR also traded mostly sideways 
throughout the session but appears weaker than the DJIA.  We 
noticed that the 50-dma remains as overhead resistance and this 
is the second failure at the $31.30 area.  Traders could look for 
new bearish positions considering that we have a relatively tight 
stop but it might be more palatable to wait for MAR to trade back 
below the $30 mark again before initiating new plays.  The latter 
suggestions remains even more true now that MSFT has blown away 
earnings and the broader indices are sure to open higher Friday 
morning.  New bearish positions can probably wait.

Picked on October 15th at $30.74
Results since picked:      +0.34
Earnings Date           10/03/02 (confirmed)





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

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

Allergan Inc. - AGN - cls: 62.39 chg: +2.60 stop: 62.26

To quote this play's original description: "... 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."  The Dow did give back a healthy 
chunk of its gains on the heels of a poor earnings report from 
INTC on Tuesday night.  AGN, however, didn't really get moving to 
the downside.  Shares outperformed the broader market and traded 
an Inside Day.  It looked like the stock might see some 
additional consolidation at the top of its channel.  
Unfortunately the bears didn't have much of chance this morning 
after shares gapped higher with the major indices.  AGN opened 
above Tuesday's high and cracked through the 200-dma at $62.39.  
Our stop-loss at $62.26 was violated in afternoon trading, thus 
closing our play for a loss of 5.5%.  It was certainly 
frustrating to see this happen after the technical picture had 
looked so bearish, but fighting the market is usually not a 
winning proposition.  Traders who chose to use a more aggressive 
stop-loss should be watching for a reversal on Friday.  How AGN 
behaves at current levels will be very telling.  A rollover from 
the 200-dma might send the stock back into its descending 
channel, while a move above the August highs ($63.00) would 
probably bring more bulls off of the sidelines.  Shorts should be 
concerned that AGN was broken above bearish resistance on the p-
n-f chart.

Picked on October 15th at $58.98
Results since picked:      -3.28
Earnings Date           10/24/02 (unconfirmed)
 





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

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

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

Oracle Corp. - ORCL - close: 9.87 change: +0.55 stop: 9.69 *new*

Lookin' good!  ORCL continues to trade in a very bullish fashion.  
Yesterday's pullback was understandable, considering that the bad 
news from INTC had the overall tech sector trading sharply lower.  
Bulls can be pleased with the fact that the stock's sell-off was 
halted by its 50-dma ($9.28).  In another positive development 
for this play, ORCL responded enthusiastically to Thursday's IBM-
induced NASDAQ rally.  Shares outpaced the GSO.X software index 
and briefly popped above the $10.00 level.  Of course, tonight's 
earnings report from Mr. Softee will have a large impact on how 
this play progresses.  The software giant reported Q1 results of 
50 cents/share.  Consensus estimates were for an EPS of only 43 
cents.  Microsoft announced strong revenue guidance as well, but 
did issue a lower-than-expected Q4 forecast.  The overall 
reaction seems to be positive, as evidenced by the 5% gain in 
after-hours action.  This bodes well for a continued rise in ORCL 
on Friday.  A break above $10.00 could lead to a retest of the 
200-dma at $11.20.  We've set a profit-target slightly below this 
level at $10.94.  In the event shares rollover from $10.00, we're 
giving ORCL a short leash with a tight stop at $9.69.  This 
should protect a gain of roughly 10%.

Picked on October 11th at $8.73
Results since picked:     +1.14
Earnings Date          12/17/02 (unconfirmed)




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

Yahoo! Inc. - YHOO - cls: 14.67 chg: +0.01 stop: 15.26

Yesterday's strong performance by YHOO had us concerned.  With 
the stock looking overbought and the broader market tanking, we 
were expecting that shares would at least finish with a loss.  
This was a sign that perhaps the bulls were still in control.  
Our worries were slightly allayed by today's action.  Once again 
YHOO traded contrary to the NASDAQ, as shares finished with a 
one-cent loss.  The source of this relative weakness was a 
downgrade from Merrill Lynch, who cut Yahoo's rating from "buy" 
to "neutral" on valuation concerns.  With shares rolling over 
from psychological resistance at $15.00 (just above the 200-dma), 
our stop-loss remained safe.  A positive reaction from tonight's 
MSFT earnings could lead to a rally above that level, so it 
wouldn't be surprising to see this play stopped out tomorrow.  If 
shares do head lower, new entries could be targeted on a move 
below yesterday's low of $13.72.

Picked on October 15th at $14.42 
Results since picked:      -0.25
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 

VLO     Valero Energy              31.86     +2.55
PCIS    Precis Inc                  5.50     +0.60
FIMGE   Fischer Imaging Corp        6.00     +0.68

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

NOK     Nokia Corp                 16.60     +1.60
SAP     SAP Ag Ads                 16.85     +3.45
PSFT    PeopleSoft Inc             16.36     +1.51
ODP     Office Depot               14.40     +1.40
WIN     Winn Dixie Stores          16.42     +1.12
CHS     Chico's FAS Inc            19.30     +1.60
TMPW    TMP Worldwide Inc          12.21     +1.52
SNDK    Sandisk Corp               18.97     +3.32
BOBJ    Business Objects           15.25     +1.95
MACR    Macromedia Inc              9.06     +1.73
HTCH    Hutchinson Technology      19.19     +1.94
ZRAN    Zoran Corp                 13.60     +2.10
IMPH    Impath Inc                 14.91     +1.86
RINO    Blue Rhino Corp            16.58     +1.43
AFCO    Applied Films Corp         12.45     +2.94

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

IBM     Intl Business Machines     72.20     +7.30
UTX     United Technologies        60.00     +5.37
MER     Merrill Lynch & Co         37.49     +1.59
ADP     Automatic Data Processing  42.20     +2.89
ALL     Allstate Corp              39.87     +2.30
SLM     SLM Corp                  100.74     +3.49
SYK     Stryker Corp               64.70     +2.50
PGR     Progressive Corp           57.10     +1.90
CAT     Caterpillar Inc            40.36     +1.60
INTU    Intuit Inc                 52.00     +2.14
ACE     ACE Ltd                    34.70     +1.75
ZMH     Zimmer Holdings            42.05     +2.05
AGN     Allergan Inc               62.39     +2.60
GENZ    Genzyme Corp               28.36     +2.09
SYMC    Symantec Corp              39.25     +3.69
SAFC    Safeco Corp                35.44     +1.44
UVN     Univision Communications   25.45     +1.76
SHW     Sherwin-Williams Co        25.77     +1.63
MUR     Murphy Oil Corp            90.83     +3.42
CDWC    CDW Computer Centers       52.99     +4.55
MBT     Mobile Telesys             34.36     +1.04
TSG     Sabre Holdings Corp        20.63     +1.91
PRE     Partner Re Ltd             53.16     +1.36
NFX     Newfield Exploration       34.90     +1.12
PPDI    Pharmaceutical Products    28.48     +2.22
CLE     Claires Stores Inc         24.61     +1.61
TSCO    Tractor Supply Co          39.39     +1.93

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

KO      Coca-Cola Co               45.90     -1.30
S       Sears                      23.15    -10.80
NOC     Northrop Grumman Corp     101.50    -13.51
HNZ     H.J.Heinz Co               30.31     -1.67
ATK     Alliant Tech Systems       57.01     -4.14

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

BG       Bunge Ltd                 22.42     -1.98
LSTR     Landstar System           52.63     -1.23
SBUX     Starbucks Corp            21.72     -1.69




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