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Daily Newsletter, Tuesday, 10/29/2002

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PremierInvestor.net Newsletter                 Tuesday 10-29-2002
                                                   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:      Bulls Gain Confidence on Bad News
Market Sentiment: What Will it Take?
Play-of-the-Day:  A Blizzard of Bad News

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U.S. Market Numbers
-----------------------------------------------------------------
MARKET WRAP  (view in courier font for table alignment)
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      10-29-2002           High     Low     Volume Advance/Decline
DJIA     8368.94 +  0.90  8399.74  8198.04 1.67 bln   1293/1872
NASDAQ   1300.65 - 15.19  1318.93  1279.19 1.52 bln   1485/1780
S&P 100   449.10 -  3.23   452.37   440.90   Totals   2778/3652
S&P 500   882.31 -  8.08   890.64   867.91
RUS 2000  367.70 -  0.40   369.01   362.64
DJ TRANS 2248.18 - 31.25  2282.03  2207.32
VIX        36.80 +  1.13    38.66    35.94
VXN        52.57 +  0.95    54.27    52.14
Total Vol   3,423M
Total UpVol   844M
Total DnVol 2,517M
52wk Highs    53
52wk Lows    177
TRIN        1.93
PUT/CALL    0.73
-----------------------------------------------------------------

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

Bulls Gain Confidence on Bad News

Dell Computer retracted comments made by Michael Dell in Asia
yesterday. The President of Dell said they were taken out of
context and PC demand is steady at the low end of estimates.
GE said it had billions of dollars of exposure to "airlines,
loans and leases" across several sectors and could rake huge
charges for this exposure. Consumer Confidence falls to a nine
year low. Retail Sales falls again. Markets rebound +200 points
from the lows. We are clearly traveling through an alternate
reality.

Nasdaq Chart


Dow Chart



Unbelievable! That is the only way to describe it. Bad news
was breaking out all over but the markets failed to crash.
Sure we fell to 8200 on the knee jerk reaction to the confidence
numbers but selective memory kicked in at 2:30 and the Dow
exploded back to positive territory.

Dell, CSCO and QCOM led the Nasdaq down at the open. Dell
on the retraction of the "we are seeing a pickup in demand"
comments that pumped the Nasdaq yesterday. CSCO on news from
UBS that said they were seeing substantial price cuts on the
major Cisco products. Rumors of desperation were flying and
with CSCO announcing earnings next week there are fears that
things might not be "steady" at Cisco. QCOM took a dive on
news out of China that they would release their own CDMA
technology to avoid paying royalties to QCOM. This negative
tech news was nothing compared to the news to follow.

The economic world cracked open with a rupture equivalent to
the current Mt Aetna eruption. Consumer Confidence numbers
rocked analysts with a drop to 79.4 compared to estimates of
90.0. This was a full five points below last October, the
month after 9/11 and a nine year low. Every internal number
was terrible. The present situation fell to 77.5 from 88.5.
Expectations fell to 80.7 from 97.2. Business conditions and
jobs also took a hit as the continued high unemployment and
falling stock market took its toll. Consumers expecting business
conditions to worsen over the next six months rose +45%.

With confidence the number one indicator for holiday sales it
is painting a bleak picture for this quarter. Retail Sales
fell another -1.9% from last week and was the largest decline
since December 2000. This is also the lowest level since Jan
2002. With consumers still benefiting from the refinancing boom
and sales still dropping it shows how bad conditions really are.
With little pent up demand, high consumer debt levels and market
wealth evaporating it would be real easy for the consumer to
close their wallets and become couch potatoes until things
improve.

There are strong signs that the real estate bubble is bursting
and even if the Fed does cut rates next week the difference in
mortgage rates probably cannot fuel another wave of buying.
Anybody who has not already refinanced is probably not credit
worthy as they have had well over a year to take that step.
The Fed is simply running out of straws to grasp for why the
economy should be growing.

Techs saw more writing on the wall and that writing was from
the World Semiconductor Trade Statistics Committee. They lowered
their estimates for global chip growth for 2003 to +16.6% from
21.7% citing failure of the expected recovery to appear. Even
worse the Americas were projected to see a -11.3% decline in
sales. I said decline, not slower growth. They said the 4Q was
on track to come in well below estimates. The Gartner Group
ridiculed the estimates saying they were way to high and
unachievable. Gartner analyst Richard Gordon said most forecasters
were already down to the low teens or 10% range for global
growth. Whoever you believe the picture is clear. The tech
sector is in trouble and earnings estimates based on unreasonable
expectations are in trouble and more warnings are in our future.

Those warnings should be about a month away since the current
earnings season is drawing to a close. The Cisco earnings on
Nov-6th will be the last major report in this cycle. Dell has
already affirmed and should not be a factor on the 14th. Cisco
is the next problem and then warning season will start around
Thanksgiving. We will have three weeks to coast on the earnings
already reported and speculate on the 4Q results.

The only positive thing from today's confidence report was the
increased possibility of a rate cut next Wednesday. If it did
happen there is almost unanimous agreement that it will have
no real impact. With Fed funds at 1.75% today you have a real
rate of zero after backing out nominal inflation. Cutting rates
again will only impact the sentiment on Wall Street and on Main
Street around the country. Since it takes 6-9 months for any
cut to be seen in the economy it is entirely conceivable that
the Fed could be raising rates again before any cut next week
would be felt. The rate cut may be a no show next week despite
the expectations. With only three real bullets left in the Fed
gun, they would never cut below 1.00%, it means the Fed must be
very careful about using them. If they gave us an "insurance"
cut next week and there was a terrorist attack two weeks later
then they would have even less ammo to combat it. With an Iraq
war almost a certainty they need to save ammo to combat that
event if it goes bad. Consumer Confidence fell to 55 during
Desert Storm. Lastly, there has been no Fedspeak to telegraph
an imminent rate cut. The Fed almost always gives the market
guidance in advance that they are considering a cut. Instead
there has been an abundance of "more than adequate stimulus"
already in the economy. That is Fed shorthand for "we are not
cutting again." A drastically bad nonfarm payrolls report on
Friday is about the only thing that could prompt the Fed to
act. Care to speculate how the market will react with no cut
on Wednesday?

The "rate cut" theory was all Wall Street could talk about today.
Unfortunately this talk resulted in taking any cut out of contention
as a market mover. Whenever Fed funds futures show nearly a 100%
chance of a cut, (85% tonight), THAT CUT IS ALREADY PRICED INTO
THE MARKET! Think about it. Consumer Confidence hit a nine-year
low, GE warned, Dell retracted, CSCO downgraded, chips were
slashed and the Dow closed up on the news. Why?

Glad you asked. My email has been burning up all day with readers
ready to grab the Prozac, shoot their computers or worse. "Why
in the heck" is the basic question. There are multiple answers
to this question. First is the historical seasonality of the
October rally. Much more often than not the end of October brings
an end to bear markets and beginning of new bulls. This sets up
retail and institutional traders who have been sitting on the
sidelines waiting patiently as monster dip buyers. Everyone who
did not buy the bounce off the Oct-10th lows thinks every dip is
their last chance to climb on the train. According to Wall Street
Digest there is $6.5 trillion in cash sitting on the sidelines
and waiting for the signal the recovery is underway. Having that
much cash burning a hole in investors pockets is sure to find
a few willing spenders with every dip.

There is still the year-end for mutual funds on Oct-31st. They
may have completed their tax selling but they have not completed
marking up their portfolios for year end. This means they are
using idle cash to bid up stocks at every opportunity to keep
prices as high as possible until their books close. Every $1 of
gain in a stock price before Thursday's close adds to their
claimed returns for advertising. This was the underlying bid I
was expecting for the week last Sunday. The best way for funds
to make maximum use of their funds is to implement aggressive
buy programs at critical support and resistance points. This is
exactly what we saw today. The Dow was moving sideways to down
at about 8225 at 2:30 and the Nasdaq was setting new lows. At
2:45 several huge futures orders hit and triggered the buy stops
on the S&P. Just when the momentum failed and shorts started
taking new positions they did it a couple more times until the
Dow hit tough resistance at 8400 that they could not break. It
looked like three aggressive futures programs at 3:PM, 3:15 and
3:30. Was it funds? Was it the plunge protection team? Both?
Nobody knows but it was not a million retail traders thinking
that 3:00, 3:15 and 3:30 were suddenly prime dip buying
opportunities because all the bad news was out.

You do have the few retail traders who think a Fed rate cut
is the magic bullet for the markets and will support the market
by nibbling at stocks all week. I get emails every day complaining
that we are not more bullish and don't we know this is a new bull
market. I won't get into that here but the perma bulls are still
alive and kicking. They are counting on October living up to its
reputation as being the bear killer.

This brings us to Wednesday. Earnings are still with us but the
bigger blue chip companies are done. The majority of the earnings
left are second and third tier companies and the quality of the
earnings tends to be lower than the early reporters. The possibility
of major positive surprises are slim. We are faced with the death
by 1000 cuts torture as these smaller companies report. The
bloom is off the rose and we will be left with the battle between
sellers at resistance and funds trying to propel rallies off
support. Since any rate cut is already priced in I would think
Thursday/Friday could be a challenge. This is definitely not a
week for the faint of heart.

Enter Very Passively, Exit Very Aggressively!

Jim Brown
Editor


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

What Will it Take?

by Steven Price

Rangebound, rangebound, rangebound.  I almost convinced myself
that we were heading lower and had fallen through the floor.
Then, out of nowhere, came Sir Alan and his rate cut, scooping up
fallen equities and polishing the store display windows for
shoppers during the holiday season.   In one of the truly
confounding days of the year for the market, we got a time bomb
that never went off.  After this morning's Consumer Confidence
number came in more than 10 points below expectations (TEN
POINTS!!!), the markets held for a short period of time and then
began their slide.  Consumers who don't believe in a stock market
recovery and are worried about their jobs, certainly don't spend
money on choo-choo trains and Christmas ornaments.   The man on
the street interviews on CNBC all sounded doom and gloom, as
would be shoppers talked about not having money to spend during
the holidays and having a hard time keeping up with the cost of
living.  The Grinch truly had stolen Christmas, along with a good
chunk of investors 401 (k) plans.  And then the bears' hearts
grew three sizes and scooped the Dow 30 at 8200.

In last night's wrap, I said to look for a break in 8250 for
signs of a breakdown.  Apparently, I was off by 50 points (which
really irritates me since I erased 8200 and upped the support
level before publication). However, it appears I'll have another
chance at playing Nostradamus, as the bulls stepped in and kept
the Dow pinned between 8200 and 8550.  The 170-point gain off the
low of the day (8198) was just forceful enough to underscore the
belief that bad economic news is simply stoking the fire for a
rate cut.

The Retail Index (RLX.X), which looked like it was on its way to
breaking below support at 280, instead bounced just above, at
282, before finishing up on the day.   The index closed at 293,
for a gain of almost 20 points off the low of the day and left
this analyst wondering how holiday sales will recover from the
current declining trend in time to save Christmas. With Consumer
Confidence at its lowest level in nine years, it would seem that
a sell-off is in order.  However, the idea that a rate cut, which
usually takes 6-9 months to work its way through the economy,
will somehow translate into increased holiday sales, apparently
has made its way into the sector, which I wouldn't buy with
monopoly money right now. However, I am also not going to start
shorting a group that is mysteriously rising.  There should be
plenty of opportunity once we get a breakdown here and I'll be
patient and wait for the right entry points. A close below the
50-dma of 286.94 would be the first step and a break below 280
would be the next.

One of these days, the S&P 500 may manage a hold above 900, but
right now it seems to be heading in the opposite direction.  Even
though the Dow glowed green by the close of business, the SPX
lost 8 points to finish at 882.15.  It has been flirting with 900
recently and a close over that level would confirm bullish action
in the Dow.  However, the broad based index has not been able to
hold over 900, and now appears to be confirming the recent
economic data, even if its more famous counterpart is giving the
opposite impression. The two indices generally move in concert,
but the technical developments in the SPX have been more reliable
recently, starting with the bounce from its July 24 low that
ignited the recent rally.

The semiconductor sector has given back some ground after its
astounding 38%, three-week gain.  The Semiconductor Sector Index
(SOX.X) peaked its head over 300 briefly on Monday and has
stalled, falling today to a close of 282.72.  It bounced just
below its 50-dma of 273, reaching an intraday low of 271.  The
50-dma has provided support on several occasions in the last week
and a close below that level would be an indication that short
plays in the sector may be plausible again.   Maxim Integrated
Products (MXIM) released earnings after the bell that met
expectations.  The company, however, made cautious statements
about a decline in orders and suggested that their customers have
limited visibility as to when demand for their products will
increase.  It will lower its capex spending and the CEO will take
no salary beginning next June, along with a 30% pay cut for its
vice presidents.  Doesn't sound good for the sector, however this
mirrors many of the recent announcements during the recent rally.
After an initial dip in the stock, MXIM was trading to the plus
side after hours.

The bad news keeps coming and the bulls keep buying the dips.
While that's not a formula that makes me want to buy out of the
money calls, it does make me weary of shorts. We will get more
data at the end of the week, including 3rd quarter GDP,
unemployment and nonfarm payrolls.  While I would like to think
this will give us a sense of direction, my guess is that we'll
have to wait until next week's FOMC decision on rates before
seeing a long term trend begin to form.  Until then, trade the
swings and don't expect bad news to necessarily drive down the
market.  That news may just be a call to Sir Alan.


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

Market Averages

DJIA ($INDU)

52-week High: 10673
52-week Low :  7286
Current     :  8368

Moving Averages:
(Simple)

 10-dma: 8361
 50-dma: 8220
200-dma: 9314

S&P 500 ($SPX)

52-week High: 1176
52-week Low :  775
Current     :  882

Moving Averages:
(Simple)

 10-dma:  886
 50-dma:  873
200-dma: 1006

Nasdaq-100 ($NDX)

52-week High: 1734
52-week Low :  795
Current     :  960

Moving Averages:
(Simple)

 10-dma:  964
 50-dma:  916
200-dma: 1172

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

The Semiconductor Index (SOX.X): The SOX finally managed to clear
resistance at 300 intraday on Monday.  However, it has turned
around and successfully re-tested the 50-dma (573).  This dma
provided support last week and it will now be interesting to see
which direction we will break through.  Although Maxim (MXIM),
which released earnings after the bell, made cautious comments
about the future, the stock traded up and may indicate another
run at 300 for the sector.  We will be looking for the breakdown
below the 50-dma, rather than try to play a sector long that has
shown declining revenues and poor future visibility.

52-week High: 657
52-week Low : 214
Current     : 345

Moving Averages:
(Simple)

 10-dma: 275
 50-dma: 273
200-dma: 431

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

Market Volatility

The VIX crept back up today on the drop in the broader markets.
The end of day rally in the Dow couldn't lift the S&P 500 or OEX
into positive territory and we saw an increase in premiums as
traders got another glimpse of the downside. With a host of
economic data coming out at the end of the week and the FOMC rate
decision due next week, we will most likely see a VIX between 35
and 40, unless we get a breakdown below Dow 8200, or rally above
8600.

CBOE Market Volatility Index (VIX) = 36.80 +1.13
Nasdaq-100 Volatility Index  (VXN) = 52.47 +0.95

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

          Put/Call Ratio  Call Volume   Put Volume

Total          0.74        480,667       357,886
Equity Only    0.64        354,334       226,130
OEX            0.91         28,432        25,913
QQQ            0.18         49,429         8,669

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

Bullish Percent Data

           Current   Change   Status
NYSE          36      + 0     Bull Confirmed
NASDAQ-100    54      - 1     Bull Alert
Dow Indust.   57      + 4     Bull Confirmed
S&P 500       48      - 1     Bull Alert
S&P 100       55      + 2     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   1.12
10-Day Arms Index  1.05
21-Day Arms Index  1.02
55-Day Arms Index  1.27


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       1114          1611
NASDAQ     1401          1711

        New Highs      New Lows
NYSE         23              63
NASDAQ       37              77

        Volume (in millions)
NYSE     1,709
NASDAQ   1,590

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

Commitments Of Traders Report: 10/22/02

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 added to both long and short positions, however
increased shorts by an additional 11,000 contracts.  Small
traders left long positions virtually unchanged, but reduced the
short side by 11,000, taking the opposite approach.


Commercials   Long      Short      Net     % Of OI
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%)
10/22/02      432,775   463,827   (31,052)   (3.5%)

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
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     23.3%
10/22/02      134,641    72,681    61,960     29.8%

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 their long contract positions by 3,400
contracts, while increasing shorts by 2,100.  Small traders left
longs unchanged, while reducing shorts by 3,600.


Commercials   Long      Short      Net     % of OI
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%)
10/22/02       48,954     54,088    (5,134) ( 4.9%)

Most bearish reading of the year: (15,521) -  3/13/02
Most bullish reading of the year:   9,068  - 06/11/02

Small Traders  Long     Short      Net     % of OI
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%
10/22/02       10,202     8,892     1,310    11.8%

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

In a continuing trend with other markets, commercials increased
short positions by 2,000 more contracts than they increased
longs.  Small traders reduced longs positions by 1,600 and shorts
by 1,000.


Commercials   Long      Short      Net     % of OI
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%
10/22/02       22,189    13,448    8,741      24.5%

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
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%)
10/22/02        4,445     9,270    (4,825)   (35.1%)

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

Hartford Financial - HIG - cls: 44.40 chg: -3.00 stop: *text*

Company Description:
The Hartford is one of the nation's largest investment and
insurance companies, with 2001 revenues of $15.1 billion. As of
June 30, 2002, The Hartford had assets of $179.6 billion and
shareholders' equity of $9.7 billion. The company is a leading
provider of investment products, life insurance and group
benefits; automobile and homeowners products; business property
and casualty insurance; and reinsurance. (source: company press
release)

Why We Like It:
In a classic example of "good news, bad news," Hartford Financial
announced earnings on Monday.  The company said that improvements
in its property-casualty businesses and a lack of major
catastrophes (hurricanes, terrorist acts, etc) had returned its
business to profitability.  Adjusted earnings were $1.15/share,
versus the consensus estimate of $1.11.  Sounds good enough, but
these positive results were tempered by the slightly lowered
forecast for full-year 2002.  Hartford cited weakness in the
equity markets as the primary reason for the downward guidance.
Deutsche Bank Securities reacted today by lowering HIG's earnings
expectations for both 2002 and 2003.  The bears got even more to
chew on with the news that Hartford had been hit with a $1.8
billion asbestos-related lawsuit.

As could be expected, these developments pushed the stock lower.
HIG broke through support at the 50-dma ($46.25) and finished
with a 6.3% loss.  This created a double-bottom sell signal on
the point-and-figure chart.  Today's sell-off came on the third-
strongest volume reading of the year, showing a good deal of
bearish conviction.  The rolling MACD and falling daily
stochastics provide additional evidence of technical weakness.
Glancing at the daily chart, it looks like HIG could eventually
retrace its mid-October rally and move back to the $38 region.
We're going to initially target a decline to that area, but won't
hesitate to close the play if HIG bounces from psychological
support at $40.00.  This play will be triggered if HIG falls
under today's low ($44.25), with a stop at $47.16.  This will
force shares to trade above the 50-dma and whole-number
resistance at $47.00.  More aggressive traders may want to use a
stop slightly above yesterday's high of $49.32.

Picked on October xxth at $xx.xx <- see text
Results since picked:      +0.00
Earnings Date           10/28/02 (confirmed)







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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 10-29-2002
                                                    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:     HIG
  Bearish Play Updates:  MLM, MO, SUP

High Risk/Reward
  Bullish Play Updates:  T, WPI

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

Hartford Financial - HIG - cls: 44.40 chg: -3.00 stop: *text*

Company Description:
The Hartford is one of the nation's largest investment and
insurance companies, with 2001 revenues of $15.1 billion. As of
June 30, 2002, The Hartford had assets of $179.6 billion and
shareholders' equity of $9.7 billion. The company is a leading
provider of investment products, life insurance and group
benefits; automobile and homeowners products; business property
and casualty insurance; and reinsurance. (source: company press
release)

Why We Like It:
In a classic example of "good news, bad news," Hartford Financial
announced earnings on Monday.  The company said that improvements
in its property-casualty businesses and a lack of major
catastrophes (hurricanes, terrorist acts, etc) had returned its
business to profitability.  Adjusted earnings were $1.15/share,
versus the consensus estimate of $1.11.  Sounds good enough, but
these positive results were tempered by the slightly lowered
forecast for full-year 2002.  Hartford cited weakness in the
equity markets as the primary reason for the downward guidance.
Deutsche Bank Securities reacted today by lowering HIG's earnings
expectations for both 2002 and 2003.  The bears got even more to
chew on with the news that Hartford had been hit with a $1.8
billion asbestos-related lawsuit.

As could be expected, these developments pushed the stock lower.
HIG broke through support at the 50-dma ($46.25) and finished
with a 6.3% loss.  This created a double-bottom sell signal on
the point-and-figure chart.  Today's sell-off came on the third-
strongest volume reading of the year, showing a good deal of
bearish conviction.  The rolling MACD and falling daily
stochastics provide additional evidence of technical weakness.
Glancing at the daily chart, it looks like HIG could eventually
retrace its mid-October rally and move back to the $38 region.
We're going to initially target a decline to that area, but won't
hesitate to close the play if HIG bounces from psychological
support at $40.00.  This play will be triggered if HIG falls
under today's low ($44.25), with a stop at $47.16.  This will
force shares to trade above the 50-dma and whole-number
resistance at $47.00.  More aggressive traders may want to use a
stop slightly above yesterday's high of $49.32.

Picked on October xxth at $xx.xx <- see text
Results since picked:      +0.00
Earnings Date           10/28/02 (confirmed)





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

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

Martin Marietta - MLM - cls: 27.71 chg: +0.26 stop: 28.51 *new*

This play was triggered yesterday when MLM dropped below $28.00.
Shares were pressured by a downgrade of Vulcan Materials (VMC), a
competing construction materials company.  Today's action was
relatively quiet, as the stock traded an Inside Day and finished
with a small gain.  It's hard to make much of a flat session, but
we do like the way shares were unable to move above previous
support at $28.00.  MLM looks technically poised to continue
lower.  However, our timeframe for playing this stock is limited
to just one more day.  Stronger-than-expected earnings (or other
positive comments, such as increased future guidance) on Thursday
morning could render the weak technicals obsolete.  We're not
willing to chance that possibility, so we'll drop this play as of
Wednesday's closing price.  Our stop has been moved down to
$28.51.

Picked on October 28th at $27.99
Results since picked:      -0.28
Earnings Date           10/31/02 (confirmed)




---

Phillip Morris - MO - close: 42.05 change: +0.41 stop: 44.11

The Dow Industrials moved lower this morning after the bulls were
spooked by the latest consumer sentiment data.  MO was met with
heavy selling shortly after the opening bell and quickly reached
our entry trigger at $41.49.  The stock bottomed out at $41.12
before rebounding with the Dow during the final 90 minutes of
trading.  Although shares finished with a gain, the technical
picture remains bearish.  Today's trading produced a lower low
and a lower high, and MO has unable to trade above the longer-
term downtrend.  This leads us to believe that more weakness is
on the horizon.  New entries can be targeted on a move below
$41.00, but be aware that shares may find support at $40.00.  Our
stop is located at $44.11, safely above the 50-dma.

Picked on October 29th at $41.49
Results since picked:      -0.56
Earnings Date           10/17/02 (confirmed)




---

Superior Industries - SUP - cls: 42.75 chg: unch stop: 46.01

As shown by the 5-minute charts, SUP pretty much traded in lock-
step with the Dow Jones on Tuesday.  Shares traded to an intraday
low of $41.16 before recouping its losses and finishing
unchanged.  Although this rebound created a bullish daily
candlestick, the point-and-figure chart paints a more negative
picture.  SUP had previously rallied up to bearish resistance at
$45.00, and today's intraday weakness created a three-box
reversal.  If the Dow moves back towards the 8200 region on
Wednesday, we'll be looking for SUP to fall below today's low of
$41.16.  A breakdown below this level would provide a possible
action point to add short positions.  Although we're leaving our
stop set at $46.01, more conservative traders may want to use a
stop just above the converging 50-day and 200-day moving averages
at $45.15.

Picked on October 28th at $42.97
Results since picked:      +0.22
Earnings Date           10/17/02 (confirmed)






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

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

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

AT&T Corp. - T - close: 12.97 change: -0.48 stop: 11.98

On the surface it looks like T fell victim to a weakening telecom
sector on Tuesday.  Shares saw heavy selling early in the session
and fell below the 200-dma, while the IXTCX combined telecom
index gave back 2.6%.  There wasn't any noteworthy company-
specific news to explain this decline.  However, a little digging
around turned up some interesting reports on SBC Communications.
The second-largest local telephone company received approval from
the U.S. Justice Department to offer long-distance services in
California.  The prospect of added competition may have
discouraged AT&T investors, leading to today's 3.5% decline.
Technically, we're not trilled with the way shares closed under
the 200-dma ($13.01).  It now appears as if T may retest the 50-
dma at $12.23.  There's also possible support at the $12.75
(where the stock bounced on Tuesday), but for the time being we
would not advise taking any new positions.

Picked on October 23rd at $13.40
Results since picked:      -0.43
Earnings Date           10/22/02 (unconfirmed)




---

Watson Pharma. - WPI - cls: 27.58 chg: +0.98 stop: 24.34 *new*

Not too shabby!  WPI moved to a new relative high on Tuesday,
following the previous session's breakout above resistance at
$26.00.  The past two days of gains have been accompanied by
rising volume, which is a very good sign for the bulls.  In
another positive development, shares solidly outperformed the
DRG.X pharmaceutical index on Tuesday and finished with a 3.6%
gain.  Turning our attention to the daily chart, we see that WPI
is approaching the bottom of its unfilled gap from late March.  A
move above this level ($28.20) would clear the way for a move to
the $30.00 area.  Aggressive traders could target new positions
if WPI moves into the gap, but the most prudent strategy would
probably be to wait for a pullback to $27.00.  Note that we've
inched our stop up to $24.34, slightly below the 50-dma.

Picked on October 28th at $26.20
Results since picked:      +1.38
Earnings Date           11/06/02 (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

MANT    Mantech Intl.              23.54     +0.56
MINI    Mobile Mini                14.45     +1.11
BYS     Bay State Bancorp          21.87     +1.12

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

PKI     Perkinelmer Inc             6.30     +1.06
SAH     Sonic Automotive           16.57     +1.64
EXEL    Exelixis Inc                5.06     +1.48

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

TEVA    Teva Pharma.               71.05     +2.33
EL      Estee Lauder               29.06     +1.70
PEG     Public Service Ent.        27.45     +1.67
ACV     Alberto-Culver             52.17     +1.07
TUES    Tuesday Morning Corp       20.51     +1.50
BSTE    Biosite Inc                29.30     +4.34

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

DEO     Diageo Plc.                42.43     -2.74
RTP     Rio Tinto Plc              73.00     -3.00
BF      BASF Ads                   35.40     -1.31
FDX     Fedex Corp                 52.60     -1.13
COX     Cox Communications         27.85     -2.30
PAYX    Paychex Inc                27.61     -1.15
HIG     Hartford Financial         44.40     -3.00
JHF     John Hancock Fincl.        28.76     -1.54
LNC     Lincoln National           27.74     -1.34
BRL     Barr Laboratories          57.76     -2.09
AOS     A O Smith Corp             24.15     -1.08

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

HBC     HSBC Holdings              55.36     -0.41
AA      Alcoa Inc                  22.37     -0.39
XL      XL Captial                 77.65     -2.93
ABK     Ambac Financial            61.07     -1.63
AOC     Aon Corp                   20.40     -0.70
GPT     Greenpoint Financial       43.18     -0.86




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