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Daily Newsletter, Tuesday, 10/22/2002

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PremierInvestor.net Newsletter                 Tuesday 10-22-2002
                                                   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:      Is this Round 10 for Bulls?
Market Sentiment: Cross Eyed
Play-of-the-Day:  Retail Resistance

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U.S. Market Numbers
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MARKET WRAP  (view in courier font for table alignment)
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10-22-2002                  High    Low     Volume Advance/Decl
DJIA     8450.16 - 88.08  8534.08 8376.15   1518 mln  1038/2198
NASDAQ   1292.80 - 16.87  1307.60 1280.66   1510 mln  1322/1904
S&P 100   452.59 -  3.65   455.20  447.96    totals   2360/4102
S&P 500   890.16 -  9.56   899.72  882.40
RUS 2000  362.66 -  5.97   368.63  362.49
DJ TRANS 2312.43 - 26.10  2354.99 2284.73
VIX        39.34 +  1.10    40.44   38.95
VIXN       53.61 +  1.27    54.41   50.98
Put/Call Ratio 0.78
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===========
Market Wrap
===========

Is this Round 10 for Bulls?
By John Seckinger
jseckinger@OptionInvestor.com

The Dow and the S&P 500 have set higher lows for eight 
consecutive daily sessions, while the 30-year bond has failed to 
take out a previous session's high since October 10th.  Relative 
Strength in the Dow is currently at 58.98 on a daily basis, 
higher than when the blue chips were at 9077 on August 22nd.  
Furthermore, both contracts seem comfortable above their 50 DMA's 
and are beginning to eye the 200 DMA for the first time in quite 
awhile.  Of course, there are some caveats that will be explained 
later.  

After Texas Instruments (TXN) warned that revenue and profit for 
the current quarter will miss expectations due to decreased 
demand for chips used in personal computers, traders were 
certainly prepared for an early morning retreat.  However, even 
as shares of TXN fell $3.12, or 18.22%, to 14.00 and hurt the 
overall Oil sector (XOI down 3.45%), the overall equity markets 
kept the recent bullish sentiment relatively intact.  Other 
developments on traders’ minds before the market opened included 
59 companies issuing quarterly earnings.  The results were as 
followed: 61% better than expectations, 24% in-line with 
estimates, and 15% were below forecasts.  Let's spend a moment 
and look at a few notable names.  

Taiwan Semiconductor (TSM) was one of the companies failing to 
meet analyst expectations, and as a result fell seven percent to 
6.95.  Even though TSM is not part of the Semiconductor Index 
(Sox), Tuesday's weakness coupled with Texas Instrument's 
miss clearly gave investors one more reason to book profits in 
semis after a solid run-up beginning on October 8th (209 to 
Monday's high of 283).  Speaking of the Sox, this highly-watched 
index fell six percent, or 17.22 points, to 265 on moderate 
activity.  However, Monday's low of 260 remained intact.  Hmmm...Is 
this a pattern? 

Other stocks making headlines included AT&T (T) beating earnings 
estimates but coming under pressure after the opening bell.  
Shares did manage to recover, rising from 12.05 to 13.24 before 
traders took profits during the last few minutes.  Shares still 
closed higher by 0.52 at 13.05.  Speaking of volatility, shares 
of McDonald's (MCD) announced in-line 3Q earnings and gapped 
higher (18.33 to 18.95).  Also fortunate for bulls was the fact 
that MCD noted that it will continue to target EPS of $1.43 "or 
better" for all of 2002, excluding special charges.  After the 
gap higher, shares traded almost vertical to 19.95.  Since then, 
shares formed an aggressive bearish channel and closed at 18.90.  
Closing underneath its opening level may not be a good sign going 
forward.  Note:  This Dow component just missed its 50 DMA 
(exponential) by about six cents.    

Other securities reaching the spot light included UPS, G, and 
BUD.  United Parcel Service (UPS) fell three percent after lower-
than-expected 3Q earnings and guidance that was underneath 
analysts' estimates.  Shares of UPS settled at 62.26 and 
underneath both its 22 and 50 DMA's (62.61 and 62.71, 
respectively).  Gillette also fell under both moving averages, 
losing a solid 5% to 29.90 after reporting in-line net income 
for its 3Q.  Anheuser-Busch (BUD) lost ground as well, closing 
lower by 1.8% to 53.97 after Morgan Stanley downgraded shares to 
"equal-weight" from "overweight."  It was interesting that shares 
of BUD managed to close 17 cents above its opening level and 
didn't even test its 22 DMA to the downside.  Of course, it was 
just yesterday when shares hit a new all-time high.  I don't want 
to over simplify things, but it does make sense for companies 
such as BUD to do well when the economy is falling apart.  
However, shares have managed to remain resilient as the major 
equity markets recovered.  Interesting.  

Speaking of the economy, there were no economic reports to digest 
on Tuesday.  Tomorrow is light as well, with only the Fed's Beige 
Book due out.  This report will hopefully outline economic 
conditions in the Fed's 12 districts.  Moreover, it might give 
insight (possibly encrypt) into November 6th's FOMC Meeting.  
Economists currently expect no change in the fed funds rate on 
November 6th, and fed funds are now only 40% sure that the Fed 
will cut rates by 25 bps before year's end.  Later this week, 
September durable goods orders, September new and existing home
sales and the University of Michigan's consumer sentiment index 
are scheduled to be released.   

Not only does the economic calendar look better over the few 
days, but I would not be surprised to see market activity 
increase as well.  Tuesday's 88 point shaving in the Dow 
came on volume of 1.5 billion and down volume out surpassing up 
volume by a 2:1 margin.  Decliners beat advancers 2:1 as well, 
while new lows outpaced new highs 89-17.  This may not be 
something to write home about; however, bulls certainly are not 
letting profit-taking turn into short selling and long 
liquidation.  Turning to the tech-laden Nasdaq, the 16.87 point 
loss came also on volume of 1.5 billion shares exchanging 
hands.  Down volume beat up volume by an 8:7 margin, while
decliners outnumbered advancers 19:13.  New lows beat new highs 
by a score of 70-35.  Checking the other major indices, the S&P 
500 contract fell 9.5 points to 890, OEX lost 3.65 to 452.59, and 
the Dow Transports fell 26 points to close at 2,312.  

What about the other markets that occasionally trade either in-
step or inversely to equities?  The dollar index (DX00Y) fell 
0.17 percent to 108.04, gaining ground against the Yen and losing 
against the euro.  Comments from Kuroda, Japan's vice finance 
minister for international affairs, that the Yen is declining 
from "excessive strength" handicapped the Yen as short players 
took over.  I am glad we don’t talk down our currency like that.  
As far as the euro is concerned, strength in the overseas 
currency seemed to be more technical in nature, as the EUR/USD 
spread fell to 0.97.  The August 4th low of 0.9647 should be an 
objective for traders.  Note: A weaker dollar should not be 
good for equities.  

Also not good for equities are higher Gold prices.  The XAU index 
rose a significant 5.79% on Tuesday to close at 63.36.  This 
index was poised to fall under 59 and break a possible bullish 
intermediate trend; however, buyers clearly stepped in today and 
closed the index at its highest level since October 7th.  The 22 
DMA is above at 64.53.  Other indices most likely pressuring 
stocks included the Utility Index (UTY) and Oil (XOI).  The 
Utility Index did rise above its 22 DMA on Tuesday (234.4 versus 
and intra-day high of 237), but failed to attract buyers and 
ended up losing 2% to 229 and back below this moving average.  
The range I would watch in the UTY index is from 219 to 234.  
Turning to Oil, the 3.42% loss now has the index under both its 
22 and 50 DMA (453 and 463, respectively) at 446; however, solid 
support should be found near 438.  

So, what should have been good for equities, but wasn't on 
Tuesday?  Yes, lower bond prices (read: higher yields).  The 30-
year bond (TYX.X) saw yields rise to 5.15% on Tuesday, recording 
its highest close since August 8th.  Has the inverse relationship 
between bonds and stocks dissipated?  I don't think so; however, 
a sharp sell-off in stocks coupled with only consolidation in 
bonds could make me think otherwise.  Resistance on a yield 
basis?  5.24%.  Support?  Look for 5.1% to attract some bids, 
while a close back under 5% should have traders wondering if cash 
will flow en masse back into the fixed-income arena.  

The futures market for bonds (December Bond, ticker: ZB02Z), 
which is quoted in price, showed another session of pit selling 
and concern over mortgage companies lifting their hedges (read: 
closing position, selling bonds) and capping any attempt of a 
rally.  The Dec bond fell '15 ticks (Q-charts had the contract 
down ‘31, but I believe that is a bad quote) to 107'19 and closed 
lower for the eight consecutive session.  

Ever since October 10th, I have been worried about a particular 
hedge fund liquidating a position that was entered in hopes of a 
rate cut by the ECB (which didn't happen).  I am starting to 
think of another strategy:  This same hedge fund is now selling 
bonds short in an attempt to offset the massive losses sustained 
over the last few weeks.  As is usually the case, the bond market 
loves to trade directionally.  Therefore, since it would take a 
ton of energy to turn things around and get prices back towards 
113, why not maintain the pattern of lower prices.  Until prices 
prove us wrong, least resistance remains lower and this should 
help intermediate-term equity bulls.  What would change the 
picture?  How above a move back above 109'13.  

Time for an after-hours look.  KLA-Tencor beat earnings by three 
cents and began to erase part of Tuesday's 10.2% collapse; 
however, the conference call did not go well (guided Dec EPS to 
0.14 versus expectations of 0.24) and shares are currently at 
28.90 and underneath Tuesday's close of 30.53.  This will 
undoubtedly affect the Semiconductor Sector (Sox) during trading 
on Wednesday.  Other after-market developments included Metro One 
(MTON) announcing that Sprint (PCS) will not sign a new contract 
with the company, as well as Abgenix beating earning estimates by 
six cents with a (0.39) report.  Since Sprint represents roughly 
32% of MTON's revenue, it should not be surprising that shares 
are lower in after hours.  On Tuesday, MTON closed 5.34% lower at 
9.03, and shares appear to be currently trading near 5.20 
following the announcement.  Seems hard to believe.  

Turning to ABGX, shares closed at 6.54 on Tuesday and appear to 
be up fractionally after the better than expected results.  
Additionally, Computer Associates reported earnings of 0.04 and 
beat estimates for a rise in profits of 0.02.  Revenues also 
increased by 5.3%.  Shares closed on Tuesday at 12.10 and appear 
to be higher at 13.01 in after-hours activity.  Overall, the 
December Nasdaq futures are lower by 8 points, or 0.82%.  
The S&P 500 futures contract is lower by 0.50 at 891.   

Time for some illustrations.  Beginning with a weekly chart of 
the Dow, it seems as though bears might begin to get confident 
and scare bulls into initiating positions.  Why?  There is a 
bearish trend line, 38.2% retracement from March’s high to 
October’s low, and the 22 weekly moving average.  Before we sell 
the house and buy puts, let us look at a daily chart as well.  
Note:  The red line comes in at 8605.  

Chart of Dow Jones, Weekly   



A daily chart shows a less bearish look, and actually used a 
38.2% retracement as support.  Furthermore, the 50% retracement 
at 8774 seems to correlate with many traders’ thoughts when 
predicting resistance.  

So, which chart do I put more weight in?  Well, the weekly chart 
should have more psychological weight (8605), and if that level 
is penetrated it would make sense to turn to the daily and expect 
a move to 8774.  Support should be harder to determine, and I 
would look at the daily chart for insight.  8400, the 22 and 50 
DMA’s, and then 8000.

Chart of Dow Jones, Daily



Of course, the bond market might have something to say about 
equity direction.  As stated earlier, I would focus more on 
support than resistance levels.  

Chart of the 30-year, Daily



Also noted earlier is the Gold Index, outperforming during 
trading on Tuesday and sending the index 5.79% higher and above a 
solid pivot area (62.96).  I would definitely place the XAU index 
on the radar screen going forward.  

Chart of Gold and Silver Sector (XAU), Daily 



Good luck. 


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

Cross Eyed
by Steven Price

When the Dow began sinking this morning, it looked as though it 
had finally run out of steam.  The news from Texas Instruments 
last night got us rolling downhill, and there wasn't much good 
news to slow the descent.  Then a funny thing happened on the way 
down.  We set another higher low.  In fact, we bounced right at 
the 61.8% retracement level of the July-October drop. While a 
continued Dow rally still has quite a few resistance levels to 
get through in the 8700-8750 range, it does seem to be building 
some legs with the series of higher intraday lows.  We still 
finished down on the day by 88 points, but the pullback was 
certainly not catastrophic, and stayed within the current 
ascending trend. 

Also in the plus column, the bullish percentages in the major 
indices continue to climb.  The NYSE bullish percentage (which 
reflects the number of stocks in the NYSE currently giving point 
and figure buy signals) has bounced from a low of 26% for the 
third straight time and is now in bull-confirmed status. The last 
two bounces have taken the percentage to 64% in March and 46% in 
August.  It now stands at 32%, so it would imply that NYSE stocks 
still have some room to run.  Of course, the bears would claim a 
trend toward lower extensions on the bounce. The NDX has been on 
a bullish percentage run from 16% to 46%.  It is beginning to 
look extended, but still has a little room to the bearish 
resistance line at 58%.  The Dow has rebounded from 8% to 50%, 
and is also looking extended, with only a few percentage points 
left to bearish resistance at 58%.

The Nasdaq Composite also gave something back today. However, it 
held over its 50-dma, in spite of the Texas Instruments (TXN) 
stating it expects a 10% revenue decline in the current quarter. 
It will be interesting to see whether the market can shake off 
more bad news in the semis, after Cymer (CYMI) missed 
expectations after the bell and had some ominous statements 
regarding the chip sector.  The company said, "The semiconductor 
industry has apparently entered the second decline of a double-
dip downturn, which will have a negative impact on our fourth 
quarter operating results."  it expects 4th quarter revenues to 
decline by 20-25%.  CYMI had given up over $2 in after hours 
trading.  KLA-Tencor (KLAC) also reported after the bell, and 
initial enthusiasm that the company had beat earnings wore off 
quickly when it was revealed that there was a one-time gain of $9 
million included in the earnings.  KLAC was off almost $2 after 
hours.  The reason these companies may be important to the 
overall market rally is the effect they will have on the action 
of the semiconductor sector.  I pointed out in last night's 
market Wrap that the chart of the Semiconductor Sector Index 
(SOX.X) looked eerily similar to the way it did in August, when 
its rally was unable to hold a break above its 50-dma for more 
than a day.  The index was trading in large percentage moves, 
similar to its current action.  The failure at the 50-dma seemed 
to foreshadow a failed market rally at that point, as the 
semiconductor sector reflects technology demand and spending.  
The SOX closed above this average on Monday, but once again was 
unable to hold that level for more than a day.  This evening's 
news from CYMI and KLAC should send the SOX lower in the morning, 
in what could be another sign of a failed rally in the broader 
markets. 

Telecoms got a boost after AT&T and Bell South both posted better 
than expected earnings.  However, even though AT&T posted its 
first profit in a year, revenue was still down 8.3%.  This was 
due in part  to a decrease in long-distance sales, data services  
and cable television customers.   BellSouth saw a 5.7% decline in 
revenue, as the Baby Bells have been hurt by a shift to email and 
corporate customers have delayed technology spending. 

There are an awful lot of reasons the market should not be going 
up.  Therefore it is hard to "buy into" this rally.  However, the 
current trend is up, and if the SOX can't manage to derail that 
trend, then we won't stand in its way.  The fact that the NYSE 
bullish percentage has so much room to run seems in contrast with 
the extension of the NDX and Dow. So, what can we make of it? We 
will no doubt continue to see wild swings as earnings are dumped 
on us each day during the month of October. Conservative 
investors may want to sit out "whipsaw" season, and aggressive 
investors playing with risk capital may want to widen their stops 
to allow for the swings. It is getting harder to predict the next 
day's action, but we will try to surf the wave the best we can.  
I normally advocate letting profits run and cutting losses, but 
in this environment, it seems that taking profits when you can 
may be the more prudent action. 

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

Market Averages

DJIA ($INDU)

52-week High: 10679
52-week Low :  7286
Current     :  8450

Moving Averages:
(Simple)

 10-dma: 8042
 50-dma: 8256
200-dma: 9355

S&P 500 ($SPX)

52-week High: 1176
52-week Low :  775
Current     :  890

Moving Averages:
(Simple)

 10-dma:  855
 50-dma:  877
200-dma: 1012

Nasdaq-100 ($NDX)

52-week High: 1734
52-week Low :  795
Current     :  963

Moving Averages:
(Simple)

 10-dma:  915
 50-dma:  916
200-dma: 1189

The Semiconductor Index (SOX.X): Back in August, the SOX was 
unable to hold its gain over the 50-dma for more than a day after 
a massive rally.  That was the first domino to fall, as the 
broader markets gave back their gains and more after the July-
August rally. It seems history is repeating itself. yesterday the 
SOX broke through its 50-dma for the first time since August, 
only to be met with a big disappointment after the bell. Texas 
Instruments warned last night that it was expecting a 10% revenue 
decline this quarter and sent the SOX down 17.22 points, or 6%.  
After the bell today, Cymer, which makes lasers for use in the 
production of chips, said it expects a 20-25% decline in fourth 
quarter revenue, which should send the index even lower in the 
morning. Chip equipment maker KLA-Tencor also reported earnings 
after the bell that met expectations, but it wasn't enough for 
investors who drove the stock down after hours, along with Cymer. 

52-week High: 657
52-week Low : 214
Current     : 265

Moving Averages:
(Simple)

 10-dma: 253
 50-dma: 278
200-dma: 438

Market Volatility

The VIX has closed under 40 for the last three days, indicating 
some of the fear in the market place is starting to evaporate, 
but just slightly.  However, it is staying close to 40 and most 
likely will do so until we see a settling down of the current 
whipsaw activity.  While volatility stays high with big intraday 
moves, I see it as more a measure of fear of the downside, since 
triple digit gains actually bring it down. With earnings season 
still in bloom, it may be a while before we get to the other side 
of 35. Anything over 30 is still historically high, and it 
appears traders are fully aware that we are not out of the woods 
yet. 


CBOE Market Volatility Index (VIX) = 39.34 +0.43
Nasdaq-100 Volatility Index  (VXN) = 53.61 +1.27

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

          Put/Call Ratio  Call Volume   Put Volume

Total          0.83        502,085       416,553
Equity Only    0.66        408,794       269,690
OEX            1.46         13,086        19,100
QQQ            0.67         50,553        33,894

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

Bullish Percent Data

           Current   Change   Status
NYSE          34      + 2     Bull Confirmed
NASDAQ-100    49      + 7     Bull Alert
Dow Indust.   53      +10     Bull Confirmed
S&P 500       45      + 7     Bull Alert
S&P 100       49      + 7     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   0.98
10-Day Arms Index  0.78
21-Day Arms Index  1.14
55-Day Arms Index  1.25

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        875          1853
NASDAQ     1271          1857

        New Highs      New Lows
NYSE         19              40
NASDAQ       54              77

        Volume (in millions)
NYSE     1,784
NASDAQ   1,714

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

Commitments Of Traders Report: 10/15/02

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

Not much change for the commercials, who added 2,000 long 
contracts and 4,000 shorts, for a net increase of 1600 short 
contracts, but not much % change. Small traders increased both 
positions for a net overall increase of only 300 long contracts.


Commercials   Long      Short      Net     % Of OI 
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%)
10/15/02      429,448   449,138   (19,690)   (2.2%)

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
09/24/02      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%
10/15/02      134,507    83,714    50,793     23.37%

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 made little change to the long side, but reduced 
shorts by almost 4,000 contracts.  Small traders, on the other 
hand, left long positions virtually unchanged, while more than 
doubling their short contract positions; adding a total of almost 
7,000 short contracts.


Commercials   Long      Short      Net     % of OI 
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%)
10/15/02       45,578     51,969    (6,391) ( 6.6%)

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
09/24/02       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%
10/15/02       10,185    12,478     2,293    10.1%

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 by 1,400 contracts, reducing 
shorts by 2,000.  Small traders reduced the long side by 1,800 
contracts, while slightly increasing shorts.  


Commercials   Long      Short      Net     % of OI
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%
10/15/02       20,914     9,630   11,284      36.9%

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
09/24/02        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%)
10/15/02        6,040    10,329    (4.289)   (26.2%)

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))
===============

Retail HOLDRS - RTH - close: 76.40 change: -0.95 stop: *text*

Company Description:
Retail HOLDRS are Depositary Receipts issued by the Retail HOLDRS 
Trust which represent your undivided beneficial ownership in the 
common stock of a group of specified companies that are involved 
in the retailing industry. (source: American Stock Exchange)

Why We Like It:
The retail index has been trending lower since April.  Sector 
bulls finally got a respite earlier this month when the RLX.X 
launched off its multi-year low of 245.  This relief rally seems 
to have been just that - a technical rebound that emerged from 
oversold conditions.  The fundamental picture doesn't seem to 
justify the bounce.  Weak earnings and sluggish sales results 
from retail heavyweights such as FD, MAY, KSS and S all indicate 
that the difficult economic climate has taken its toll on 
consumer spending.  We believe the RLX.X is overextended and due 
for a pullback to consolidate the recent gains.  Technically, we 
like how the recent rally was halted by a longer-term downtrend 
of lower highs.  The Retail HOLDRS are displaying a similar 
pattern, except the downtrend is bolstered by the 50-dma 
($77.50).  RTH has spent the past six days trying in vain to 
conquer this level.  A glance at the p-n-f chart shows that 
$77.00 is also the location of bearish resistance.  That's a 
whole lot of resistance for the bulls to contend with, especially 
considering the mostly negative outlook provided by the latest 
earnings cycle.  The daily stochastic oscillator (5,3,3) is 
trending lower from the overbought region.  This supports our 
notion that the bulls have run out of steam.  In terms of action 
points, we'll start this play with an entry trigger at $75.60.  
Our stop will be set well above resistance, at $79.01.  More 
conservative traders could use a stop slightly above the $78.00 
level.  If all goes as planned, RTH will rollover from resistance 
and descend towards our initial target region near $70.00.  A 
retest of the recent lows near $65.00 isn't out of the question, 
but we'd probably need to see some disastrous sector news for 
this to occur.

Annotated chart - RTH



Picked on October xxth at $xx.xx <- see text
Results since picked:      +0.00
Earnings Date                N/A
 






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as an offer to buy or sell securities of any kind. The
newsletter picks are not to be considered a recommendation
of any stock but an information resource to aid the investor
in making an informed decision regarding trading in stocks. It
is possible at this or some subsequent date, the editors and
staff of PremierInvestor.net may own, buy or sell securities
presented. All investors should consult a qualified professional
before trading in any security. The information provided has
been obtained from sources deemed reliable but is not
guaranteed as to accuracy or completeness. PremierInvestor.net
staff makes every effort to provide timely information to its
subscribers but cannot guarantee specific delivery times due to
factors beyond our control.

Please read our disclaimer at:
http://www.optioninvestor.com/page/oin/aboutus/disclaimer.html

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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 10-22-2002
                                                    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 Bearish Plays:     RTH
  Bullish Play Updates:  SHFL, VIA.B
  Closed Bearish Plays:  CMCSK

High Risk/Reward
  Bearish Play Updates:  YHOO
  Closed Bearish Plays:  QLGC

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 Bearish Plays
  ----------------- 

Retail HOLDRS - RTH - close: 76.40 change: -0.95 stop: *text*

Company Description:
Retail HOLDRS are Depositary Receipts issued by the Retail HOLDRS 
Trust which represent your undivided beneficial ownership in the 
common stock of a group of specified companies that are involved 
in the retailing industry. (source: American Stock Exchange)

Why We Like It:
The retail index has been trending lower since April.  Sector 
bulls finally got a respite earlier this month when the RLX.X 
launched off its multi-year low of 245.  This relief rally seems 
to have been just that - a technical rebound that emerged from 
oversold conditions.  The fundamental picture doesn't seem to 
justify the bounce.  Weak earnings and sluggish sales results 
from retail heavyweights such as FD, MAY, KSS and S all indicate 
that the difficult economic climate has taken its toll on 
consumer spending.  We believe the RLX.X is overextended and due 
for a pullback to consolidate the recent gains.  Technically, we 
like how the recent rally was halted by a longer-term downtrend 
of lower highs.  The Retail HOLDRS are displaying a similar 
pattern, except the downtrend is bolstered by the 50-dma 
($77.50).  RTH has spent the past six days trying in vain to 
conquer this level.  A glance at the p-n-f chart shows that 
$77.00 is also the location of bearish resistance.  That's a 
whole lot of resistance for the bulls to contend with, especially 
considering the mostly negative outlook provided by the latest 
earnings cycle.  The daily stochastic oscillator (5,3,3) is 
trending lower from the overbought region.  This supports our 
notion that the bulls have run out of steam.  In terms of action 
points, we'll start this play with an entry trigger at $75.60.  
Our stop will be set well above resistance, at $79.01.  More 
conservative traders could use a stop slightly above the $78.00 
level.  If all goes as planned, RTH will rollover from resistance 
and descend towards our initial target region near $70.00.  A 
retest of the recent lows near $65.00 isn't out of the question, 
but we'd probably need to see some disastrous sector news for 
this to occur.

Annotated chart - RTH



Picked on October xxth at $xx.xx <- see text
Results since picked:      +0.00
Earnings Date                N/A
 




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

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

Shuffle Master - SHFL - cls: 22.65 chg: -0.49 stop: 22.39

Shares of SHFL shot higher early on Tuesday morning and came 
within just 24 cents of our exit target at $23.94.  Broader 
market weakness quickly dragged the stock back towards the 
$22.50-$23.00 range, which dictated trading for the rest of the 
session.  Today's new high is encouraging, but with SHFL so close 
to our stop we would not be surprised to see this play closed on 
Wednesday.  Our stop at $22.39 should protect a gain of almost 
10%.  Traders looking for a larger move may want look to close 
positions on another failed intraday rally to the $23.00 region.  
Given SHFL's proximity to our target, we would not advise taking 
any new entries at this time.

Picked on October 14th at $20.36 
Gain since picked:         +2.29
Earnings Date           08/22/02 (confirmed)




--- 

Viacom Inc - VIA.B - cls: 46.40 chg: -0.10 stop: 45.49 *new*

Shareholders of VIA.B enjoyed a gain of more than 5% on Monday 
after the stock broke above resistance at $44.  Today's action 
was bullish as well, as shares traced a new multi-month high 
before succumbing to the weak broader market.  VIA.B finished 
with just a fractional loss and displayed good relative strength 
versus the Dow Jones.  With the point-and-figure chart showing a 
quadruple-top buy signal, odds appear to be in favor of a 
continued rally.  Alas, our timeframe for this play is limited to 
just one more day.  Viacom announces earnings before the bell on 
Thursday morning.  To eliminate any risk of getting caught by a 
downside surprise, we're going to drop VIA.B as of tomorrow's 
closing price.  Should shares head lower ahead of the 
announcement, our stop at $45.49 (just under today's low) should 
protect a small gain.  Aggressive traders could consider holding 
a portion of their long positions over earnings, but be aware of 
the possibility (albeit slim) of a sharp gap lower on Thursday 
morning.

Picked on October 21st at $45.11
Results since picked:      +1.29
Earnings Date           10/24/02 (unconfirmed)





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

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

Comcast Corp. - CMCSK - close: 23.25 change: +1.65 stop: 22.51

Monday's session saw CMCSK underperform the broader market and 
finish with a small gain.  As we had anticipated, the 50-dma 
($21.83) did a fine job of thwarting any serious advance.  Shares 
looked prone to a rollover, but that was before AT&T released 
their earnings report on Tuesday morning.  T, you'll recall, 
plans to sell its Broadband unit to CMCSK by the end of the year.  
The company's announcement included falling revenues, but 
investors appeared to key in on the EPS result, which came in one 
cent better than estimates.  T also commented that it expects its 
broadband unit's revenue to grow in the low double-digits next 
year.  CMCSK stock shot rapidly higher after the opening bell, as 
the bears yielded the 50-dma without so much as a whimper.  This 
play was closed for a loss of 7.2% when shares reached our stop 
at $22.51.  Now that the stock has broken out of its descending 
channel, it looks like today's rally could extend to the $25 
region.  We would not recommend holding short positions at this 
time.

Picked on October 18th at $20.99
Results since picked:      -1.52
Earnings Date           10/28/02 (unconfirmed)
 





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

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

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

Yahoo! Inc. - YHOO - cls: 14.85 chg: -0.11 stop: 15.26

"Sideways" is probably the best adjective to describe the recent 
trading in YHOO.  Shares dropped towards the $14.40 region on 
Monday morning after Soundview Technology cut the stock's rating 
from "outperform" to "neutral," citing valuation and no 
indication of a rebound in online advertising.  Although YHOO 
appeared to be ready for a rollover, the bears weren't able to 
contend with the rallying NASDAQ.  The lack of any major news had 
shares trading in a directionless fashion on Tuesday.  But if the 
after-hours action is any indication, tomorrow's action will be 
much more interesting.  Overture, a player in the e-
commerce/internet portal business, reported earnings after the 
bell.  OVER easily beat estimates but was trading lower by more 
than 10% in the extended session.  While we didn't have time to 
dissect their numbers, briefing.com indicated a disappointing 
revenue upside was responsible for the sell-off.  This could bode 
well for our short play.  YHOO was also moving lower in after-
hours, and it looks like near-term support at $14.25 might be 
abandoned on Wednesday morning.  Aggressive traders could target 
new entries if such a breakout occurs.  Those looking for more 
bearish confirmation may want to wait for a move below $13.72.

Picked on October 15th at $14.42 
Results since picked:      -0.43
Earnings Date           10/09/02 (confirmed)
 




===============
HR Closed Plays
===============

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

QLogic Corp - QLGC - close: 30.44 change: -0.06 stop: 31.06

Arragh!  We're kicking ourselves for not using a wider stop on 
QLGC.  Triggered on Tuesday morning at $29.70, this play was 
closed when shares rebounded and traded above $31.05.  Although 
the 50-dma ($30.26) didn't provide any sort of obstacle for the 
bulls, shares were eventually turned back at the bearish point-
and-figure trend ($32.00).  The stock moved lower in afternoon 
trading and ultimately finished with a small loss.  QLGC was 
trading slightly lower in the after-hours session, following a 
pair of interesting earnings reports.  KLAC beat estimates but 
said profit had slumped because of weak demand for chip 
manufacturing tools.  The company guided lower in the all-
important conference call, leading to a sell-off in extended 
trading.  CYMI was also getting whacked after missing estimates 
by 2 cents and warning of a weak fourth quarter.  Cymer believes 
that "...the semiconductor industry has apparently entered the 
second decline of a double-dip downturn."  Ouch!  That statement 
alone could weigh heavily on the chip sector tomorrow.  Traders 
still short QLGC should be watching for the stock to fall under 
today's low ($29.26) and move back into its descending channel.  
The SOX.X is already looking weak, with today's 6.1% decline 
confirming a failed rally at the 50-dma (278).

Picked on October 22nd at $29.70 
Results since picked:      -1.36
Earnings Date           10/16/02 (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 

MCD     McDonalds Corp             18.95     +0.65
NX      Quanex Corp                38.75     +0.86
FLS     Flowserve Corp             12.17     +1.47
BPRX    Bradley Pharma.            10.74     +0.77
FLM     Fleming Companies           5.50     +0.61
ULTE    Ultimate Electronics       13.18     +0.76
ECTX    Ectel Ltd                   9.43     +0.67
ANDW    Andrew Corp                 8.58     +1.07

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

SEPR    Sepracor Inc                7.30     +1.20
FLS     Flowserve Corp             12.17     +1.47
DRIV    Digitial River             10.01     +1.01
ICPT    Intercept Inc              13.57     +2.31
TNB     Thomas & Betts             15.85     +1.51
WEBX    WebEx Comm.                15.36     +1.47
FRGO    Fargo Electronics           9.94     +1.04

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

VZ      Verizon Comm.              37.75     +2.07
MCK     Mckesson Corp              31.02     +1.78
INTL    Inter-Tel Inc              24.95     +1.78
BLS     BellSouth Corp             26.29     +1.59
OCR     Omnicare Inc               22.50     +1.72
RYAAY   Ryanair Holdings           35.88     +1.66
DNEX    Dionex Corp                30.68     +1.21

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

WAT     Waters Corp                23.61     -4.29
YELL    Yellow Corp                30.25     -1.96
TTWO    Take-Two Interactive       26.21     -1.42
CECO    Career Education Corp      43.99     -8.40
SPX     SPX Corp                   92.08     -19.27
UPS     United Parcel Service      62.26     -1.92

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

CVX     ChevronTexaco             71.75     -2.68
APC     Anadarko Petroleum        45.12     -2.08
PL      Protective Life           31.00     -0.97
BP      BP Plc                    39.99     -2.05
MTW     Manitowoc Co              24.82     -2.48
KB      Kookmin Bank              32.05     -3.66




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DISCLAIMER
=================================================================

This newsletter is a publication dedicated to the education
of stock traders. The newsletter is an information service
only. The information provided herein is not to be construed
as an offer to buy or sell securities of any kind. The
newsletter picks are not to be considered a recommendation
of any stock but an information resource to aid the investor
in making an informed decision regarding trading in stocks. It
is possible at this or some subsequent date, the editors and
staff of PremierInvestor.net may own, buy or sell securities
presented. All investors should consult a qualified professional
before trading in any security. The information provided has
been obtained from sources deemed reliable but is not
guaranteed as to accuracy or completeness. PremierInvestor.net
staff makes every effort to provide timely information to its
subscribers but cannot guarantee specific delivery times due to
factors beyond our control.

Please read our disclaimer at:
http://www.optioninvestor.com/page/oin/aboutus/disclaimer.html

*****************************************************************
ADVERTISING INFORMATION

For more information on advertising in PremierInvestor.net
Newsletter, or any Premier Investor Network newsletter please
contact Contact Support.

*****************************************************************


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




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