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Daily Newsletter, Tuesday, 12/17/2002

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PremierInvestor.net Newsletter                 Tuesday 12-17-2002
                                                   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
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In section one:

Market Wrap:      Quarter Pounded
Market Sentiment: Holiday Markdown
Play-of-the-Day:  Clean-up On Aisle Six

-----------------------------------------------------------------
U.S. Market Numbers
-----------------------------------------------------------------
MARKET WRAP  (view in courier font for table alignment)
-----------------------------------------------------------------
      12-17-2002           High     Low     Volume   Adv/Dcl
DJIA     8535.39 - 92.00  8638.64  8525.03 1.53 bln 1235/1964
NASDAQ   1391.85 -  8.50  1408.16  1385.37 1.29 bln 1430/2043
S&P 100   458.58 -  4.68   463.26   457.86   Totals 2665/4007
S&P 500   902.96 -  7.44   911.22   901.74
RUS 2000  391.25 -  3.65   394.90   390.16
DJ TRANS 2343.38 - 15.60  2367.90  2338.56
VIX        30.16 +  0.17    30.70    29.59
VXN        48.14 -  1.70    50.50    47.81
Total Vol   3,004M
Total UpVol   998M
Total DnVol 1,963M
52wk Highs   135
52wk Lows    133
TRIN        1.49
PUT/CALL    0.76
-----------------------------------------------------------------

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

Quarter Pounded

McDonalds set the tone for trading on Tuesday with its eighth
profit warning in eight quarters and its first anticipated
quarterly loss ever. MCD gapped down to a seven year low below
$16 and took WEN with it. The slowing sales at burger outlets
are being blamed on competition and lower priced menus that
are making it tougher to turn a profit.

Dow Chart - Daily


Nasdaq Chart - Daily


On the economic front the CPI managed only a modest +0.1% gain
and caused only a yawn among traders. Inflation is far from a
problem and is not expected to be a factor for at least six
months. Industrial Production was weaker than expected at only
+0.1% as demand across the manufacturing sector remains weak.
However the prior months drop was revised up slightly. This
was not enough to energize traders but any positive numbers
weakens the possibility for a second dip. With capacity
utilization still low at 75.6% there is no need to invest in
business equipment and that means any recovery is also being
postponed. Looks like a deadlock. Until those utilization rates
lift off the 20 year lows there will not be any new cycle.

Homebuilders have more lives than Morris the cat and the Energizer
bunny combined. Warning after warning about the bursting of the
housing bubble have passed but the new housing starts rose by
+2.4% for November to 1.70 million units. Critics claim that
starts are different than sales but most builders are claiming
a backlog of orders. Nobody knows how many of those are due to
the down payment gifting which could go away soon. Watch for the
starts to turn into a glut once interest rates begin rising.
Still the trend is clear in the stocks. They are well off their
highs and most are showing slow downtrends. Sell the bounces on
news event like today's and ride them down with stops. RYL has
been trending down since May and would be my choice. NVR is the
builder that refuses to die and continues to hover in the $340
range. Sorry, no options.

In a surprising contradiction of news the weekly chain store
sales numbers came in slightly higher than expected at +1.9%
but comments from BBY, TGT and others pointed to a different
picture. The +1.9% gain reversed the prior weeks -2.3% loss
but only put the retailers back on track for a potential 2.5%
growth rate for December. Very disappointing for retailers
expecting a 2002 recovery. Dana Kelsey, a retail analyst,
lowered her estimates from 2.5% growth in December to estimates
of flat to at most +2.0% growth based on in store surveys.
Target a large discount retailer likely to be on the positive
side of the retail buying binge reported that month-to-date
sales were "well below plan" and threw cold water on holiday
sales hopes.

Electronics retailer Best Buy warned that profits would be
below prior estimates due to slow sales in home entertainment
products and fierce price competition. They said the massive
promotions necessary to attract buyers for the holiday would
cut into margins. Circuit City posted a loss for last quarter
and its stock hit a ten year low. Trends showed that consumers
have cut spending on high priced digital satellite systems,
wide screen TVs and expensive wireless phones due to the
uncertain economy and fears of layoffs after the new year.
BBY and CC also faced increased competition from Wal-Mart in
the electronics area. WMT slashes prices on big-ticket items
to get customers in the stores in hopes they will load baskets
on higher profit items. WMT also dropped -$1.00 on the news.
It looks like our Market Monitor retail updates beat the street
by a couple weeks.

Techs were weak today and tomorrow may be more of the same.
Micron reported earnings after the bell and posted a -$.52 cent
loss compared with analyst estimates of only -.23 cents. Despite
the report by Gartner Dataquest that worldwide DRAM sales increased
+37% to $16 billion the sector is still dropping. The reason for
the drop is that they are selling +37% more chips but they are
selling them for a loss. Infineon (IFX) lost ground today after
they announced they won a $2.5 billion contract to make DRAM
chips for Kingston Memory. In this business it appears the more
contracts you win the more money you can lose. MU lost -1.50 in
after hours and helped drag down other stocks in the sector as
well. Nasdaq futures were down -9.00 as I write this.

Tomorrow traders will be focused on ORCL, which announces earnings
after the bell. Analysts are worried that the lack of big orders
could cause them to miss their estimates. Either way their
guidance will be critical to any holiday rally hopes. Larry
Ellison is known for great spin control and even weak guidance
will be played for all it is worth.

GE affirmed lowered estimates of $1.51 today and said they
expect to raise between $5 and $10 billion next year by selling
non-performing assets and shifting into higher growth technology
and consumer finance businesses. They are considering sales of
their insurance units after the big losses in the 9/11 attack.
They lowered their growth estimates to only +7% for 2003, which
is down from the +15%-18% estimates earlier this year. The
guidance was back end loaded and is predicated on a strong
second half of 2003. This was a negative for analysts since it
means GE is betting on the distant future instead of realistic
current conditions. GE said it did not see any future spark that
would enable it to raise estimates. GE fell on the news to $26.

Today's drop was just about half of yesterday's gains. Those
gains were way overdone and included some strong short covering
from those who were expecting a continued drop this week. Just
like every one day wonder recently there was no follow though
and volume remained very light. The last nine days have been
lackluster at best as traders position themselves for a potential
holiday rally. The afternoon drop broke just below support at 8550
on the Dow and 1395 support on the Compx. Without the Micron news
after the bell I would have expected another rebound at the open.
The Micron earnings has created a very negative cloud over the
chip sector and consequently the Nasdaq. The S&P futures are
surprisingly flat indicating a mixed view point. Several Dow
stocks are still looking weak led by MMM, WMT, IP, KO, BA, GM,
MCD, HD, INTC. This means any gains will be hard fought unless
these companies turn around.

With the exception of the MCD warning the news on Tuesday was
mostly good but stocks sold off anyway. With more bad news after
the close from Micron and others there is not likely to be a
material change tomorrow. The prospect of a holiday rally is
probably the only thing that will keep us afloat for the rest
of the week unless good news breaks out somewhere. I would still
be a buyer of the broader market at 8450 or lower with a stop
loss at 8250. We could see another retest of that 8450 level
before next week but with the 50 DMA at 8452 and the 100 DMA
at 8414 there is little risk of a serious drop before the
holidays. I am counting on the retail traders to boost us back
to 8750 by the end of next week. Time will tell.

If you have not taken advantage of the annual renewal special
the details are listed below.

Enter Very Passively, Exit Aggressively!

Jim Brown
Editor


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

Holiday Markdown
by Steven Price

After Monday's big rally, the markets paused for some digestion
today, with the Dow and SPX giving back 92 and 7 points,
respectively.  The Nasdaq Composite hovered close to unchanged
for most of the day, but eventually gave in and lost 8 points.
Today's drop in the Dow and SPX amounted to just less than half
of the previous day's gains and the loss in the Nasdaq registered
a pullback of about 20%.

The pullback came in spite of positive economic data that came in
close to expectations.  We saw an increase in housing sales,
continuing the strong effect low interest rates have had on the
sector over the past year.  The Consumer Price Index rose a mild
0.1%, which was expected and indicates that inflation is not yet
a concern. Industrial production also showed a slight gain, its
first since July. This follows increases in the Chicago PMI and
ISM surveys that indicate manufacturing is still showing a
rebound, albeit a small one.

The bad news came from the retail sector, as Target warned that
sales from last week, as well as for the month, are tracking
below expectations. These comments simply reinforced cautious
statements yesterday from Wal-Mart and indicate that the holiday
shopping season has not been kind to most department stores.
Best Buy (BBY) also released earnings, but warned that the fourth
quarter would come in $0.05 below previous expectations. The
company blamed the lower guidance on losses from its Musicland
stores. Nike also took a hit after Foot Locker said it was
lowering its planned purchasing of Nike products for 2003 by
$300-$00 million. After two years of a strained economy, and with
unemployment that still remains high, it certainly makes sense
that consumers are spending less on gifts and I expect earnings
warnings to be frequent from this sector after holiday sales
totals are complete.

McDonald's also weighed on the market today, as it announced it
would post its first quarterly loss ever in the fourth quarter.
It is the eighth warning in the last eight quarters and is the
result of sagging sales.  It is also the eighth time in nine
quarters that the company has missed estimates.   The company's
recent menu change has not helped improve sales and a drop off in
service has turned customers away.  Former Vice Chairman   James
Cantalupo is coming out of retirement to take over as Chairman in
2003. The stock lost 8% to close at $15.99.

Today's drop did not affect the point and figure reversals in the
Dow and SPX into columns of "X" that were registered on Monday's
rally, but the OEX has yet to confirm the reversal. Even when we
got a boost this morning, with all indices slightly in the green
at one point, the OEX could not hit that reversal level at 464
(high of 463.26).  One thing to note is that we did get a higher
high today, with the small early gains, as well as a higher low,
with the Dow bouncing at 8525 and the SPX bouncing at 901. We are
seeing some tremendous intraday trading ranges, so the intraday
patterns are hard to define.  However, when looking at daily
ranges, the pattern of lower highs and lower lows was interrupted
yesterday and if we are now seeing support above Dow 8500 and SPX
900, then we could be building a base for an end of the year
holiday rally.

We are seeing consistently low volumes, with the NYSE extending
its streak of 1.2 billion share days, and the Nasdaq coming in at
only 1.3 billion.  While that can make sentiment hard to judge,
it doesn't mean we won't get some decent moves, as there are
fewer orders to offer support and resistance in between major
levels. Expect the volume drop-off to continue through the end of
the year as more funds wrap up their buying and traders take off
for the holidays.  As we get closer to vacation time, traders
also need to be aware of the extra time decay in December options
that won't be tradable on holidays, or likely do them much good
on the half days surrounding them.
-----------------------------------------------------------------

Market Averages

DJIA ($INDU)

52-week High: 10673
52-week Low :  7197
Current     :  8535

Moving Averages:
(Simple)

 10-dma: 8577
 50-dma: 8452
200-dma: 9093

S&P 500 ($SPX)

52-week High: 1176
52-week Low :  768
Current     :  902

Moving Averages:
(Simple)

 10-dma:  904
 50-dma:  893
200-dma:  970

Nasdaq-100 ($NDX)

52-week High: 1734
52-week Low :  795
Current     : 1040

Moving Averages:
(Simple)

 10-dma: 1040
 50-dma: 1011
200-dma: 1099

-----------------------------------------------------------------
The Retail Index (RLX.X):  The retailers got more bad news today,
as Target said that not only were sales numbers below
expectations for last week, but also for the month of December.
This underscored cautious statements earlier in the week from
Wal-Mart, which also said sales were tracking at the low end of
guidance. As we get closer to Christmas, deep discounts should
offset some of the pick up in sales, leading to bottom line
damage that could be revealed in upcoming earnings releases.  The
RLX is now finding resistance at the 280 level, as well as
support just above 272.  A break under 272 could lead the group
quickly to 260, as there is little recent support between those
levels.

52-week High: N/A
52-week Low : 244
Current     : 273

Moving Averages:
(Simple)

 10-dma: 280
 50-dma: 282
200-dma: 311

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

Market Volatility

The VIX posted a small gain today, adding 0.22 to get the average
back over 30.  However, given a big drop in the Dow, traders and
institutions don't appear overly worried about a continued
pullback following Monday's rally. If that were the case, we'd
likely see a bigger increase, as put buyers would be more
aggressive. We may also be seeing the result of consolidation in
the recent range from Dow 8400-8625, as traders don't want to get
caught holding long premium (read: time decay) ahead of a short
week.

CBOE Market Volatility Index (VIX) = 30.16 +0.18
Nasdaq-100 Volatility Index  (VXN) = 48.15 -1.69

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

          Put/Call Ratio  Call Volume   Put Volume

Total          0.76        483,133       367,649
Equity Only    0.59        353,553       206,959
OEX            0.77         31,623        24,396
QQQ            0.55         64,128        35,037

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

Bullish Percent Data

           Current   Change   Status
NYSE          50      + 0     Bull Confirmed
NASDAQ-100    64      - 2     Bear Alert
Dow Indust.   60      - 3     Bear Alert
S&P 500       63      - 1     Bull Confirmed
S&P 100       64      + 0     Bear 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   1.13
10-Day Arms Index  1.30
21-Day Arms Index  1.22
55-Day Arms Index  1.13


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       1090          1739
NASDAQ     1360          1962

        New Highs      New Lows
NYSE         45              28
NASDAQ       72              36

        Volume (in millions)
NYSE       1536
NASDAQ     1307

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

Commitments Of Traders Report: 12/10/02

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 2,000 long contracts and 16,000 shorts, leading
to a 30% increase in the net short position. Small traders took
the opposite approach, leaving the net long position unchanged,
while reducing shorts by 9,000 contracts.

Commercials   Long      Short      Net     % Of OI
11/19/02      446,668   480,270   (33,602)   (3.6%)
11/26/02      447,024   488,250   (41,226)   (4.4%)
12/03/02      444,345   487,411   (43,066)   (4.6%)
12/10/02      446,831   503,583   (56,752)   (5.9%)

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
11/19/02      143,070    77,332    65,738     29.8%
11/26/02      155,975    81,962    74,013     31.1%
12/03/02      162,192    82,584    79,608     32.5%
12/10/02      162,115    71,505    90,610     38.8%

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 saw a small gain to the long side, but left shorts
virtually unchanged.  Small traders increased long positions by
1,300 contracts, while slightly reducing the short side.


Commercials   Long      Short      Net     % of OI
11/19/02       42,074     52,302   (10,228) (10.7%)
11/26/02       43,231     52,425   ( 9,194) ( 9.6%)
12/03/02       43,709     51,977   ( 8,268) ( 8.6%)
12/10/02       44,651     51,716   ( 7,065) ( 7.3%)

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
11/19/02       16,292    10,540     5,752    21.4%
11/26/02       17,574    12,329     5,245    17.5%
12/03/02       13,749     9,869     3,880    16.4%
12/10/02       15,026     9,242     5,784    23.8%

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

Commercials maintained the status quo, with no significant
changes to positions.  Small traders followed suit, making only
slight reductions to both the long and short side.

Commercials   Long      Short      Net     % of OI
11/19/02       23,535    15,741    7,794      19.8%
11/26/02       20,499    15,015    5,484      15.4%
12/03/02       20,176    15,427    4,749      13.3%
12/10/02       19,953    15,759    4,194      11.7%

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
11/19/02        4,428     8,203    (3,775)   (29.9%)
11/26/02        6,544    10,350    (3,806)   (22.5%)
12/03/02        5,885     9,781    (3,896)   (24.9%)
12/10/02        5,394     9,499    (4,105)   (27.6%)

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

Costco Wholesale - COST - cls: 27.71 chg: -0.97 stop: *text*

Company Description:
Costco Wholesale Corporation operates an international chain of
membership warehouses, mainly under the "Costco Wholesale" name,
that carry quality, brand name merchandise at substantially lower
prices than are typically found at conventional wholesale or
retail sources. The warehouses are designed to help small-to-
medium-sized businesses reduce costs in purchasing for resale and
for everyday business use. Individuals belonging to certain
qualified groups are also able to purchase for their personal
needs. (source: company website)

Why We Like It:
Business is not booming at Costco.  The company reported earlier
this month that November same-store sales rose by 2%,
significantly less than the 3.7% improvement that was forecast by
analysts.  More evidence of fundamental weakness was on display
last Thursday, when Costco issued a cautious outlook during its
quarterly earnings report.  The company lowered its earnings
expectations for the fiscal second quarter to the $0.42-
$0.44/share range.  Analysts were expecting an EPS result of
$0.45 per share.  While news of a difficult retail environment
doesn't come as a huge revelation, COST has faced the additional
difficulty of increased competition from Wal-Mart's Sam's Club
and BJ's Wholesale Club.

The daily chart for COST reflects these recent developments.  At
first glance, the stock looks like it might be overextended.
Shares have lost more than 15% since the weak sales numbers were
released on December 5th.  However, the deteriorating technical
picture suggests that the stock could have plenty of downside
remaining.  Today's 3.3% decline took COST below the $28.25-
$28.50 area, which provided support during the previous four
sessions.  This breakdown (which came on brisk volume of 9.2M
shares) created a triple-bottom sell signal on the point-and-
figure chart.  Interestingly, the retail sector's bullish percent
has just reversed into "bear alert" status.  This indicates that
retail stocks (as a whole) are beginning to show relative
weakness versus the overall market.  The retail index is looking
bearish as well, with the RLX.X threatening to break support near
272.  Zooming out to a weekly chart, we see that COST is trading
at levels not seen since May of 2000, when shares spiked down to
the $26.00 area.  You'd have to look all the way back to 1998 to
find the next level of substantial support at $20.00.
Interestingly, the p-n-f chart shows a bearish vertical count of
$18.  For the purposes of this play we'll be targeting a decline
to the $21-$22 area.  Shorter-term traders could aim for a move
to $25.00.  We'll enter this paper trade if COST falls below
$27.57.  Once the play is triggered we'll use a 10.7% stop-loss
at $30.51.  More conservative traders may want to place their
stops just above last Thursday's high of $29.70.

Annotated chart (daily) - COST:



Annotated chart (weekly) - COST:




Picked on December xxth at $xx.xx <- see text
Results since picked:       +0.00
Earnings Date:           12/12/02 (confirmed)







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newsletter picks are not to be considered a recommendation
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in making an informed decision regarding trading in stocks. It
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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 12-17-2002
                                                    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:

Net Bulls
  Bullish Play Updates:  MERQ, NVDA
  Bearish Play Updates:  LXK, TECD

Stock Bottom / Active Trader
  New Bearish Plays:     COST
  Bearish Play Updates:  AIG, DLX
  Closed Bearish Plays:  HRB

High Risk/Reward
  Closed Bullish Plays:  IDPH

Trading Ideas
  Value Plays With Bullish Signals
  Breakout to Upside (Stocks $5 to $20)
  Breakout to Upside (Stocks over $20)
  Breakout to Downside (Stocks over $20)
  Recently Overbought With Bearish Signals (Stocks over $20)


==================================================================
Net Bulls (NB) Tech Stock section
==================================================================

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

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

Mercury Interactive - MERQ - cls: 31.51 chg: -0.22 stop: 28.48

Shares of MERQ have performed well this week thus far.  The
strong rally in the market on Monday help shares of this software
company bounce strongly off the $30 level and close within
striking distance of short-term overhead resistance near $32.
The rally continued early this morning before blue chips reversed
course and succumbed to some profit taking on the McDonalds
warning.  We're encouraged by the strength we see in MERQ and the
stock's MACD oscillator is looking ready to give us a bullish
signal soon.  Considering that the GSO.X software index also
appears ready to give us another run at its 200-dma near 113 and
historical price resistance at 110, this could be a decent spot
to watch for a continued run up in MERQ.  The GSO is also showing
a MACD that looks ready to give a bullish reversal soon.  What
would seriously help this sector get moving would be some
leadership by MSFT.  The software giant's shares have been in a
slump and a breakout above $55 and $56 would really fuel a move
higher in the group.  Conservative traders still looking for a
short-term trade in MERQ could try two different approaches for a
new entry.  One would be to watch for a move back over the $32
level while the other would be to look for a bounce in the
$30.50-31.00 area.  A trader looking to reduce his/her exposure
could try a stop just under the $30 mark but the Premier
newsletter is going to currently leave our stop in place.  In the
news today there was one article on MERQ.  DB Securities
initiated coverage on MERQ with a "hold" rating and a $32 price
target.  We really appreciate them putting their neck out for
this one!

Picked on December 11th at $30.27
Results since picked:       +1.24
Earnings Date            10/17/02 (confirmed)




---

NVIDIA Corp. - NVDA - close: 14.00 change: -0.02 stop: 12.87

Shares of NVDA look significantly better than they did on Friday
but we're not sure we can exhale just yet.  The stock rebounded
strongly on Monday but then so did most of the market.  The
buying spree continued Tuesday morning but NVDA came to a dead
stop at short-term resistance of $14.75 (with another level of
short-term resistance at $15.00, look at Dec. 4th & 5th).  The
last two sessions have almost been a mirror of the SOX index.
This is not necessarily a bad thing as the index looks like it
could be building up steam for an end-of-year run.  The challenge
for NVDA is this $14.75-15.00 level.  Unless you plan on using a
tight stop the most prudent entry point may be to wait for a move
above the $15.00 mark before going long.  We're a little
concerned that NVDA did not produce more of a rally considering
what should have been some positive comments out today on a
potential rebound in graphics chips for 2003.

Picked on December 12th at $14.53
Results since picked:      - 0.53
Earnings Date            11/07/02 (confirmed)




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

Lexmark Intl. - LXK - close: 63.34 change: +1.11 stop: *text*

Did LXK put in a short-term bottom last Friday when it bounced
from its 50-dma?  That just might be the case.  Monday's action
wasn't particularly strong, as shares traded in a very tight 64-
cent range and underperformed the NASDAQ.  Today's session,
however, was more palatable for the bulls.  LXK traded strong
from the get-go and quickly filled in Friday morning's gap.  It
wasn't until the stock reached the $64.00 area that the bears
finally asserted themselves.  Shares face additional resistance
at $65.00.  If shares continue higher we may modify our entry
strategy in order to take advantage of a rollover from this
level.  A breakout above $65.00 would probably lead us to close
this inactive play.  For the time being we'll maintain our entry
trigger at $59.97.  LXK still looks like it could really get
hammered if support at $60.00 gives way, but the bears are going
to have to prove themselves first.

Picked on December xxth at $xx.xx <- see text
Results since picked:       +0.00
Earnings Date            10/21/02 (confirmed)




---

Tech Data Corp. - TECD - cls: 28.31 chg: +0.03 stop: 30.51 *new*

More sideways trading for TECD.  Although the stock has managed
to trace a series of higher lows over the past three sessions,
the bulls have thus far not been able to dispatch resistance in
the $28.50-$28.86 area.  Technically, we find it interesting that
the stock hasn't really responded to the upward action of the
MACD histogram and daily stochastics.  Divergence between stock
price and oscillator movement would be an intriguing development.
Bears will be watching for TECD to violate its recent trend of
higher lows while the oscillators continue to rise.  The fact
that the short-term uptrend hasn't been backed by strong volume
suggests that the buyers lack conviction.  A breakdown under the
relative low of $26.72, combined with a rise in volume, would
bode well for a decline to our profit-target at $25.11.  At this
point we're going to lower our stop to $30.51.  More conservative
traders could use a break-even stop at $29.49.

Picked on December 5th at $29.49
Results since picked:      +1.18
Earnings Date           11/25/02 (confirmed)






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

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

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

Costco Wholesale - COST - cls: 27.71 chg: -0.97 stop: *text*

Company Description:
Costco Wholesale Corporation operates an international chain of
membership warehouses, mainly under the "Costco Wholesale" name,
that carry quality, brand name merchandise at substantially lower
prices than are typically found at conventional wholesale or
retail sources. The warehouses are designed to help small-to-
medium-sized businesses reduce costs in purchasing for resale and
for everyday business use. Individuals belonging to certain
qualified groups are also able to purchase for their personal
needs. (source: company website)

Why We Like It:
Business is not booming at Costco.  The company reported earlier
this month that November same-store sales rose by 2%,
significantly less than the 3.7% improvement that was forecast by
analysts.  More evidence of fundamental weakness was on display
last Thursday, when Costco issued a cautious outlook during its
quarterly earnings report.  The company lowered its earnings
expectations for the fiscal second quarter to the $0.42-
$0.44/share range.  Analysts were expecting an EPS result of
$0.45 per share.  While news of a difficult retail environment
doesn't come as a huge revelation, COST has faced the additional
difficulty of increased competition from Wal-Mart's Sam's Club
and BJ's Wholesale Club.

The daily chart for COST reflects these recent developments.  At
first glance, the stock looks like it might be overextended.
Shares have lost more than 15% since the weak sales numbers were
released on December 5th.  However, the deteriorating technical
picture suggests that the stock could have plenty of downside
remaining.  Today's 3.3% decline took COST below the $28.25-
$28.50 area, which provided support during the previous four
sessions.  This breakdown (which came on brisk volume of 9.2M
shares) created a triple-bottom sell signal on the point-and-
figure chart.  Interestingly, the retail sector's bullish percent
has just reversed into "bear alert" status.  This indicates that
retail stocks (as a whole) are beginning to show relative
weakness versus the overall market.  The retail index is looking
bearish as well, with the RLX.X threatening to break support near
272.  Zooming out to a weekly chart, we see that COST is trading
at levels not seen since May of 2000, when shares spiked down to
the $26.00 area.  You'd have to look all the way back to 1998 to
find the next level of substantial support at $20.00.
Interestingly, the p-n-f chart shows a bearish vertical count of
$18.  For the purposes of this play we'll be targeting a decline
to the $21-$22 area.  Shorter-term traders could aim for a move
to $25.00.  We'll enter this paper trade if COST falls below
$27.57.  Once the play is triggered we'll use a 10.7% stop-loss
at $30.51.  More conservative traders may want to place their
stops just above last Thursday's high of $29.70.

Annotated chart (daily) - COST:



Annotated chart (weekly) - COST:




Picked on December xxth at $xx.xx <- see text
Results since picked:       +0.00
Earnings Date:           12/12/02 (confirmed)





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

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

American Intl. - AIG - cls: 59.00 chg: -1.09 stop: 62.76

With no major news moving the insurance group this week, AIG has
followed the broader market.  On Monday shares reclaimed the
$60.00 level after bouncing from the relative lows.  But despite
a triple-digit Dow rally, the stock wasn't able to approach last
week's high of $62.38.  AIG also failed to move above the 100-dma
at $61.80.  An industry survey released last night said that
property and liability insurance prices will continue to rise in
2003.  This report echoes recent comments from AIG's Chairman,
and doesn't really come as any surprise.  AIG moved in a narrow
range before drifting lower with the market during the final 90
minutes of trading.  As far as this play is concerned, we're
encouraged by the stock's rollover from short-term resistance.
It's also nice to see that the IUX.X insurance index wasn't able
to hold above its 50-day and 100-day moving averages.    A
downside violation of today's Inside Day formation could send AIG
back towards the relative low of $58.86.  A move under this level
would provide a potential action point to enter new short
positions.  Our stop is currently at $62.76.  More aggressive
traders may want to use a stop above the rising 50-dma at $62.93.

Picked on December 6th at $60.80
Results since picked:      +1.80
Earnings Date           10/24/02 (confirmed)




---

Deluxe Corp. - DLX - close: 40.85 change: -0.04 stop: 44.09

DLX sank to fresh relative lows on Monday, despite a powerful
rally in the equity market.  A downward gap was met with buyers
but this positive momentum quickly faded when shares ran into
short-term resistance at $41.50.  In a blatant display of
relative weakness, DLX actually finished the session with a small
loss.  Today's action saw the stock trade an Inside Day after
moving in a narrow 50-cent range.  A breakdown out of this
consolidation pattern on Wednesday would set the stage for a test
of psychological support at $40.00.  Should the stock break to
the upside, we'd expect the bears to defend resistance at $41.50
and $42.00.  Conservative traders may want to use a stop just
above the latter level.  New entries can be gauged on another
rollover from $41.50 or on a move below $40.00.

Picked on December 4th at $41.28
Results since picked:      +0.43
Earnings Date           10/17/02 (confirmed)





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

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

H&R Block - HRB - close: 40.10 change: +0.77 stop: *text*

In the most recent update we talked about how the narrowing range
might portend a large move for HRB.  Well, shareholders have a
lot to be excited about after today's session.  The stock was
previously unable to move above resistance at the 50-dma
($39.62), just above the long-term trendline of lower highs.  HRB
easily sliced through these levels on Tuesday morning.
Furthermore, shares also moved above $40.00 for the first time
since the stock sold off in early-November.  After trading
between $37 and $40 for nearly a month, today's upside breakout
is a very positive sign for the bulls.  The lack of overhead
resistance suggests that shares might be able to rally up to the
200-dma at $44.32 or the bearish p-n-f trend at $43.00.  In light
of this technical strength, making the decision to drop this un-
triggered short play is a no-brainer.

Picked on December xxth at $xx.xx <- see text
Results since picked:       +0.00
Earnings Date:           11/26/02 (confirmed)






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

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

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

IDEC Pharma. - IDPH - close: 34.39 change: +0.46 stop: *text*

Tuesday's session came and went without any word from the FDA on
whether or not it would approve Bexxar, a cancer drug
manufactured by Cerixa (CRXA).  As we discussed in last night's
play comments, this drug is seen as a potential rival to one of
IDEC's treatments.  IDPH traded higher today on speculation that
Bexxar would be rejected by the FDA, but shares never reached our
entry trigger of $35.61.  More than two hours after the closing
bell, the FDA final announced that Bexxar had been approved for
lymphoma treatment.  Good news for CRXA will probably prove to be
bad news for IDPH...at least in the short-run.  Tonight's
announcement came after the end of the extended trading session,
but we think it's highly likely that IDPH will gap lower on
Wednesday morning as investors react to the prospect of increased
competition.  Since this play was never triggered, we're simply
going to bid IDPH adieu.  While we continue to like the stock on
a fundamental basis, tonight's news will make it much more
difficult for the stock to clear resistance in the $35.00-$35.50
area.

Picked on December xxth at $xx.xx
Results since picked:       +0.00
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

EME     Emcor Group                56.90     +1.49
KSWS    K-Swiss Inc                24.25     +0.93
WL      Wilmington Trust           32.10     +0.61
PLMD    Polymedica Corp            34.00     +1.18
TE      Teco Energy                15.59     +0.87

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

NTES    Netease.com                11.15     +1.53

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

BSTE    Biosite Inc                34.96     +1.16
CGX     Consolidated Graphics      23.75     +1.06
TK      Teekay Shipping            41.70     +2.61
TWP     Trex Co                    36.20     +1.39
-------------------------------------------
Breakout to Downside (Stocks over $20)
-------------------------------------------
Ticker  Company Name               Close     Change

BVF     Biovail Corp               28.05     -1.16
HBHC    Hancock Holding Co         43.00     -1.11
TXI     Texas Industries           24.82     -2.63
BBY     Best Buy                   24.00     -1.40
EXPD    Expeditors Int.            32.73     -1.18
CSG     Cadbury Schwepps           24.94     -1.01
USTR    United Stationers          28.90     -1.60

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

                             




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