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Daily Newsletter, Thursday, 01/02/2003

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PremierInvestor.net Newsletter                 Thursday 01-02-2003
                                                    section 1 of 2
Copyright ) 2003, 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:      Up For The Year
Play-of-the-Day:  Uncharted Territory
Market Sentiment: Out of the Blocks


************************************************************
MARKET WRAP  (view in courier font for table alignment)
************************************************************
      01-02-2003           High     Low     Volume Advance/Decline
DJIA     8607.52 +265.90  8608.27  8342.38 1.54 bln   2521/ 719
NASDAQ   1384.85 + 49.30  1384.91  1336.98 1.28 bln   2321/1064
S&P 100   459.50 + 14.75   459.50   444.75   Totals   4842/1783
S&P 500   909.03 + 29.21   929.03   879.82
RUS 2000  392.58 +  9.49   392.60   383.09
DJ TRANS 2372.75 + 62.80  2372.75  2305.45
VIX        28.52 -  3.51    32.98    28.37
VXN        47.05 +  0.11    49.53    46.58
Total Volume 2,999M
Total UpVol  2,737M
Total DnVol    221M
52wk Highs  141
52wk Lows    44
TRIN       0.22
PUT/CALL    .76
*************************************************************

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

Up For The Year

Surprise, surprise! The markets reacted with shock after the ISM
numbers came in much stronger than expected. The Dow rebounded to
strong resistance with a +265 point gain and the Nasdaq brought
back memories of the 2002 open with a +49 point gain. On Jan-3rd
2002 the Nasdaq spurted to a +65 point gain. Unfortunately the
high for the year was only four days later.

Dow Chart


Nasdaq Chart


The ISM report got 2003 started off with a bang with a 54.7 headline
number compared to estimates of only 50. This was the highest number
in six months and the first positive after three months in the red.
Unfortunately it takes more than a one month aberration to break a
trend. There is a good possibility this was a simple dead cat bounce
prompted by inventory depletion from the last five months of dismal
performance. Eventually your shelves will go bare and you have to
order to stay in business. You may not order much but with the
current drought any increase is easy to see. The markets rallied
on strong short covering as this data was exactly opposite what
traders expected. There is a very good chance we will see a correction
in the January ISM next month.

The next most important number was the new Jobless Claims which
also came much higher than expected. Unfortunately that is not the
same good news direction as the ISM. The jobless claims jumped to
403,000 from 378,000 the prior week. The 378,000 number was also
revised up to 390,000. Considering prior week was a shortened
holiday week it is surprising that the new claims neared 400,000
again. Considering the trend to put off applying for unemployment
until January this spike in the last two weeks numbers are troubling.
I would expect to see a much higher level next week. The four-week
moving average rose to 418,750 from 407,500. The nonfarm payroll
report next Friday is not likely to show any increase in the
overall jobs numbers due to the rising jobless claims.

The ISM numbers also caused traders to ignore a survey by Goldman
Sachs that predicted trouble ahead. Goldman surveyed chief investment
officers in December and they now expect a further decline in
corporate spending in 2003 instead of the previous outlook for 2%
to 3% growth. They said the survey's outlook for long-term growth
also dropped -2% to an all time low of 5%. In the survey 66% of the
respondents expected cuts in their budgets and 43% were not expecting
any increase in spending until 2004 or later. Goldman warned that
earnings for the March quarter were at risk for the technology sector.
According to the survey the areas that will see the most gains
in spending over the next 12 months were security software, security
hardware, switches and routers, wireless LAN, storage software,
Windows Desktop 2000/XP software and midrange storage arrays. The
list was in descending order. Symantec and Microsoft both soared
over $2 on the news. VRNT gained +11% as well.

Earnings warnings began today and will accelerate substantially over
the next two weeks. PMTC, ADVS, CDN and HD headed the warning list
on Thursday. Not all news was bad with FRX and PFCB raising guidance
but the majority of guidance changes were down. Brokers were busy with
downgrades on stocks like CSCO, FHCC, LTD, TOO, MANH and others.
These are just a whisper of the flood we will be seeing next week.
With the Goldman Sachs survey echoing the same outlook as the SG
Cowen survey from last week there will be more tech downgrades
ahead.

Thursday was a good day but it was just a day. Followers of the
"first five days" trend indicator should be excited. The idea is
that the trend for the first five days will be the trend for the
year. Considering the first five days were up strongly in 2002
you can see how well that indicator works. It is more of a
superstition than an indicator. There was a parade of "technicians"
on stock TV today with mixed outlooks. Ralph Acampora returned to
CNBC as a forecaster and said the next couple of months could be
"jittery" but the second half of the year would be strong. I suspect
"jittery" is a new technical term for unstable with weak days ahead.
He said we could see a correction but he would advise buying the
dips. A successful market timer, Arch Crawford, who was rated
the number two market timer by Timer Digest the last six months,
said he expected a drop by March that would break the October lows.
He felt we would rally off the lows but fall back again in the
Oct/Nov time frame but a new bull market would begin with a
rebound in November. Arch has been pretty accurate as of late.
He was rated #1 timer for the first six months of 2002 by Timer
Digest.

Both of those forecasts and $4 will get you a cup of coffee at
Starbucks, which coincidentally said their same store sales were
up +7% in December. Now we know where everyone went when they were
supposed to be shopping. Friday is a tossup. I see strong resistance
above us from 8650 to 8950 and that should limit any further gains.
We could see a gap and crap where the market bounces at the open
only to fail shortly thereafter. It is also possible we could see
the inflow of new money from end of year retirement contributions
power the indexes even higher but the general consensus of opinion
is just like last year. An early rally followed by a couple weeks
of worry as warnings prepare us for the 4Q earnings parade. Just
like you can't determine a football game by the first possession
we cannot draw too many conclusions by the first day of trading.
The markets were very oversold coming into the holidays and we
were due for a bounce. The ISM just caught many shorts off guard
and the rest is history. Volume was still weak although it was
strongly positive. Friday could see a return of volatility which
was noticeable absent on Thursday with the VIX dropping -3.51 to
28.52. Also expected to be a factor at the open is the TRIN which
closed at an obscenely low .22 and the lowest close since
Oct-28-1997. This extreme overbought indication will be working
against traders at the open. Either way, do not apply too much
importance to Friday's outcome. Next week is when the real work
starts.

Enter Very Passively, Exit Very Aggressively!

Jim Brown
Editor


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

Stryker Corp - SYK - close: 68.02 change: +0.90 stop: *text*

Company Description:
Stryker Corporation develops, manufactures and markets specialty
surgical and medical products, including orthopaedic
reconstructive, trauma, spinal and craniomaxillofacial implants,
the bone growth factor osteogenic protein-1, powered surgical
instruments, endoscopic systems, patient care and handling
equipment for the global market, and provides outpatient physical
therapy services in the United States. (source: company press
release)

Why We Like It:
It was surprisingly difficult to find bullish play candidates
this evening.  Hundreds of stocks followed the market higher
today, but in most cases there were no actionable breakouts.
Stryker, however, has a technical picture that's sure to please
the bulls.  The stock gained 1.3% today after plowing through
resistance at $68.00.  This created a triple-top buy signal on
the point-and-figure chart.  The daily chart is looking quite
strong as well, with shares trading at new all-time highs.  The
brisk volume behind this move (the strongest reading since
November 26th) bodes well for a continued ascent.  As for
fundamental developments to explain the stock's strength, the
news front for Stryker has been surprisingly quiet.  The most
recent noteworthy story was an S&P debt rating upgrade in mid-
December.  In any case, Wall Street seems to agree with S&P's
opinion that "Stryker's strong competitive positions in the
orthopedics industry" have created a reliable cash flow.  We
think SYK will garner more buying attention now that it's trading
at new highs.  One note of caution, however - Competitor Zimmer
Holdings (ZMH) sold off by nearly 3% today on no apparent news.
While there is no indication that the weakness will rub off on
Stryker, it's of enough concern to warrant placing an action
point on this play.  Our entry trigger will be at $68.26, six
cents above today's high.  In terms of upside targets, the p-n-f
chart is currently showing a bullish vertical count of $81.
We're going to initially target a move to the $75.00 area.  Our
stop-loss, if this play is triggered, will be set at $65.43.
This would be two cents under the short-term low.

Picked on January xth at $xx.xx <-- see text
Results since picked:     +0.00
Earnings Date          10/16/02 (confirmed)





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

Out of the Blocks
by Steven Price

Talk about starting the year off with a bang!  The Dow exploded
after a better than expected ISM report, which showed expansion
in the manufacturing sector for the month of December after
contracting in November.  The Institute of Supply Management
released its reading of 54.7, which was well above expectations
for a reading of 50.1, and what started as a faded rally in the
broader indices regained strength, powering the Dow 265.89
points, the SPX 29.21 points and the Nasdaq Composite 49.34
points.  That move took us through numerous levels of intraday
resistance in the major averages and is the most bullish signal
we've had in the recent declining market.

The move leaves us almost back to the point we were in the middle
of December, before the sell-off of the last couple weeks.  That
leaves us debating whether this move is truly a trend reversal,
or simply an oversold bounce after two weeks of tax selling and
an 800-point drop from the high of December 2 to the low of
December 31.  There were a couple of significant developments, as
the Dow and SPX both closed well above their 50-dmas, which had
failed on previous rallies during the last month.  The OEX and
Nasdaq Composite also managed to close above those levels, but
just barely and the breaks were not as decisive.    A look at the
daily charts also shows the Dow, SPX and OEX all breaking
descending channels and making up over 45% of that December drop
in a single rally. The index finished the day at 8608, with the
50% retracement coming at 8649. The COMP, which previously fell
below its 38.2% retracement of the gain from October through
December 2, also bounced back above it, but into heavy
resistance.

Horizontal resistance comes in the Dow at 8625-8650, in addition
to that 50% retracement and at 910 in the SPX, which closed at
909.03.  A move through those levels could signal another run at
9000, while a failure may signal an oversold bounce and possible
re-test of Friday's lows at Dow 8242 and SPX 869.  The VIX seems
to be signaling a continuing rally, as it has bottomed below the
December levels, and reflects a lack of downside fear.  While
some traders use this as a contra-indicator when it gets to
extreme levels, it is based on action in OEX options and
indicates to me that institutions are not afraid of a sell-off
and are selling premium. That volatility contraction also occurs
as equities are bought and upside calls are sold to reduce the
cost of purchases, so there are more factors involved than just
fear.  The second reason would give bears hope to enter short
positions from strong areas of resistance, which is where we are
now.  The first reason gives bulls ammo to jump in as the VIX is
telling us that the big boys are no longer betting on the
downside.

It is unlikely that the manufacturing data was solely responsible
for the rally, since the morning actually started off with a
negative jobs report.  That report showed the four-week moving
average for initial claims at its highest level in 3 months, as
it rose by 11,250 to 418,750.  The holiday season can be volatile
for the initial claims number so economists tend to discount its
results this time of the year.  With dueling economic data, it
appears that a big bounce was already in the cards and simply
waiting to make sure there were no catastrophes in the
manufacturing data.  Once that news was out of the way, the rally
cap was on and we finished at the highs of the day.   The $64,000
question is whether the rally will break through the resistance
levels we are currently facing.

The point and figure charts are showing the first buy signals in
the Dow and SPX since December, but both are also approaching
resistance on those charts both horizontally and from descending
bearish resistance lines.  The OEX failed to confirm with its own
buy signal and has been the laggard when it comes to
confirmation.  It could also be a sign that the rally is just
another shorting opportunity on the way to yet another lower low.

Right now the high percentage plays may be from the short side as
we run into the 50% retracement levels of the recent drop in the
SPX, Dow and OEX.  That 50% retracement coincides with heavy
horizontal resistance and could be shorted with a tight stop just
above the congestion.  Those levels are OEX 463.75, Dow 8649, SPX
911.95.   If we gap higher once again, and clear those levels on
tomorrow's open, then I'll wait until we reach Dow 8800, SPX 925,
OEX 472 before looking for an entry.   We are currently in
between plenty of levels of support/resistance, as highlighted
above, so the best entries will be at the extremes and traders
will need to keep an obey very tight stops.
-----------------------------------------------------------------

Market Averages

DJIA ($INDU)

52-week High: 10673
52-week Low :  7197
Current     :  8607

Moving Averages:
(Simple)

 10-dma: 8428
 50-dma: 8548
200-dma: 8986

S&P 500 ($SPX)

52-week High: 1176
52-week Low :  768
Current     :  909

Moving Averages:
(Simple)

 10-dma:  889
 50-dma:  902
200-dma:  957

Nasdaq-100 ($NDX)

52-week High: 1734
52-week Low :  795
Current     : 1027

Moving Averages:
(Simple)

 10-dma: 1010
 50-dma: 1033
200-dma: 1074
------------------------------------------------------------------

The Semiconductor Index (SOX.X):  The SOX got a boost on the
broad market rally and crossed over several resistance levels.
However, it stopped dead at a big one, failing to break through
310, although it finished on its highs of the day. The 50-dma is
directly above at 316 and there is additional strong horizontal
resistance at 330, as well. Keep an eye on these levels, as this
index has tended to lead the broader markets with a strong
correlation over the last year. There wasn't any real news in the
sector, so we may be seeing a technical bounce after losing over
100 points in less than a month.   However, that's what we
thought when it bottomed at 211, so we'll step out of the way on
a break above 310 and wait for a test of 330 before going short.

52-week High: 657
52-week Low : 214
Current     : 308

Moving Averages:
(Simple)

 10-dma: 298
 50-dma: 316
200-dma: 379
-----------------------------------------------------------------

The VIX fell to new relative lows on the broad market rally
today.  It not only broke below 30, but fell below recent support
at 29, as well.  It now sits at its lowest level in over a month
on the biggest one-day move since October.  This indicates a
couple of things.  We normally see a VIX contraction on market
upswings, as out of the money calls are sold to finance equity
purchases.  However, the big drop may also suggest that
institutions are getting out of premium positions as fear of the
downside abates. If the big boys aren't worried, then maybe
investors can believe in a continued rally.


CBOE Market Volatility Index (VIX) = 28.52 -3.51
Nasdaq-100 Volatility Index  (VXN) = 47.05 +0.11
-----------------------------------------------------------------

          Put/Call Ratio  Call Volume   Put Volume

Total          0.76        541,057       410,730
Equity Only    0.62        405,880       250,780
OEX            1.35         22,410        30,171
QQQ            0.98         39,156        38,379
-----------------------------------------------------------------

Bullish Percent Data

           Current   Change   Status
NYSE          50      + 1     Bull Confirmed
NASDAQ-100    59      - 2     Bear Alert
Dow Indust.   50      - 3     Bear Alert
S&P 500       59      - 1     Bull Correction
S&P 100       55      - 2     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  1.36
10-Day Arms Index  1.47
21-Day Arms Index  1.42
55-Day Arms Index  1.20


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       2290           576
NASDAQ     2242           994

        New Highs      New Lows
NYSE         57              15
NASDAQ       40              14

        Volume (in millions)
NYSE       1,513
NASDAQ     1,264
-----------------------------------------------------------------

Commitments Of Traders Report: 12/23/02

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   Long      Short      Net     % Of OI
12/03/02      444,345   487,411   (43,066)   (4.6%)
12/10/02      446,831   503,583   (56,752)   (5.9%)
12/17/02      465,361   528,896   (63,535)   (6.4%)
12/23/02      408,592   467,259   (58,667)   (6.7%)

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
12/03/02      162,192    82,584    79,608     32.5%
12/10/02      162,115    71,505    90,610     38.8%
12/17/02      194,740    90,803   103,937     36.4%
12/23/02      138,756    58,236    80,520     40.9%

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   Long      Short      Net     % of OI
12/03/02       43,709     51,977   ( 8,268) ( 8.6%)
12/10/02       44,651     51,716   ( 7,065) ( 7.3%)
12/17/02       51,999     54,383   ( 2,384) ( 2.2%)
12/23/02       32,067     44,451   (12,384) (16.2%)

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
12/03/02       13,749     9,869     3,880    16.4%
12/10/02       15,026     9,242     5,784    23.8%
12/17/02       23,027    18,027     5,000    12.2%
12/23/02       17,009     5,865    11,144

Most bearish reading of the year: (10,769) - 06/11/02
Most bullish reading of the year:  11,144  - 12/23/02

DOW JONES INDUSTRIAL

Commercials   Long      Short      Net     % of OI
12/03/02       20,176    15,427    4,749      13.3%
12/10/02       19,953    15,759    4,194      11.7%
12/17/02       23,782    20,605    3,177       7.2%
12/23/02       14,991    11,103    3,888      14.9%

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
12/03/02        5,885     9,781    (3,896)   (24.9%)
12/10/02        5,394     9,499    (4,105)   (27.6%)
12/17/02        5,498     9,045    (3,547)   (24.4%)
12/23/02        4,584     6,296    (1,712)   (15.7%)

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




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Copyright ) 2003 PremierInvestor.net. and
The Premier Investor Network.
Do not duplicate or redistribute in any form.
PremierInvestor.net Newsletter                 Thursday 01-02-2003
                                                    section 2 of 2
Copyright ) 2003, All rights reserved.
Redistribution in any form is strictly prohibited.

The entire newsletter is best viewed in COURIER 10 for alignment
=================================================================

In section two:

Net Bulls
  Closed Bearish Plays:  TECD

Stock Bottom / Active Trader
  New Bullish Plays:     SYK
  Bullish Play Updates:  BSX
  Bearish Play Updates:  DLX
  Closed Bearish Plays:  AIG

High Risk/Reward
  Bearish Play Updates:  CEPH

Split Trader / Stock Splits
  Bullish Play Updates:  FRX


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

===============
NB Closed Plays
===============

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

Tech Data Corp. - TECD - cls: 28.52 chg: +1.56 stop: 28.61

That was quite a reversal.  On Monday morning TECD broke below
support at $26.75 and traded to a relative low of $25.67, a mere
56 cents from our profit-target.  An intraday rebound took shares
back to the $26.50 area.  This uptrend carried over into
Tuesday's session as shares pushed above short-term resistance at
$27.00.  However, it wasn't until Thursday morning that the bulls
really asserted themselves.  TECD rocketed higher with the NASDAQ
and violated our stop-loss at $28.61.  The steep and sudden
nature of this rally suggests that a large amount of short-
covering was taking place.  After failing to keep the stock near
relative lows, it looks like a lot of bears simply decided to
throw in the towel.  In the news today, Tech Data announced this
morning (after the bell) that it will carry a new bundled product
for U.S. reseller customers.  This did not appear to be a
significant contributing factor in the rally.  With TECD once
again trading near resistance in the $28.50-$29.00 area, a
breakout to the upside seems likely if the broader market
continues higher on Friday.  Our play has been closed for a gain
of 2.9%.

Picked on December 5th at $29.49
Results since picked:      +0.88
Earnings Date           11/25/02 (confirmed)






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

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

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

Stryker Corp - SYK - close: 68.02 change: +0.90 stop: *text*

Company Description:
Stryker Corporation develops, manufactures and markets specialty
surgical and medical products, including orthopaedic
reconstructive, trauma, spinal and craniomaxillofacial implants,
the bone growth factor osteogenic protein-1, powered surgical
instruments, endoscopic systems, patient care and handling
equipment for the global market, and provides outpatient physical
therapy services in the United States. (source: company press
release)

Why We Like It:
It was surprisingly difficult to find bullish play candidates
this evening.  Hundreds of stocks followed the market higher
today, but in most cases there were no actionable breakouts.
Stryker, however, has a technical picture that's sure to please
the bulls.  The stock gained 1.3% today after plowing through
resistance at $68.00.  This created a triple-top buy signal on
the point-and-figure chart.  The daily chart is looking quite
strong as well, with shares trading at new all-time highs.  The
brisk volume behind this move (the strongest reading since
November 26th) bodes well for a continued ascent.  As for
fundamental developments to explain the stock's strength, the
news front for Stryker has been surprisingly quiet.  The most
recent noteworthy story was an S&P debt rating upgrade in mid-
December.  In any case, Wall Street seems to agree with S&P's
opinion that "Stryker's strong competitive positions in the
orthopedics industry" have created a reliable cash flow.  We
think SYK will garner more buying attention now that it's trading
at new highs.  One note of caution, however - Competitor Zimmer
Holdings (ZMH) sold off by nearly 3% today on no apparent news.
While there is no indication that the weakness will rub off on
Stryker, it's of enough concern to warrant placing an action
point on this play.  Our entry trigger will be at $68.26, six
cents above today's high.  In terms of upside targets, the p-n-f
chart is currently showing a bullish vertical count of $81.
We're going to initially target a move to the $75.00 area.  Our
stop-loss, if this play is triggered, will be set at $65.43.
This would be two cents under the short-term low.

Picked on January xth at $xx.xx <-- see text
Results since picked:     +0.00
Earnings Date          10/16/02 (confirmed)





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

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

Boston Scientific - BSX - close: 42.99 change: +0.47 stop: 40.99

This long play has started to claw its way back to break-even,
thanks in large part to the huge equity rally on Thursday.  While
today's 1.1% gain wasn't very impressive compared to the 3.1%
move on the Dow, it's encouraging to note that the stock has thus
far maintained the three-week trend of higher lows.  The strong
volume behind today's upward move, combined with the reversing
daily stochastics (5,3,3), offer technical evidence that BSX may
have put in a short-term bottom.  If the market continues higher
on Friday we'll be looking for BSX to shake off its relative
weakness and catch up with the overall market.  Speculative
traders can consider taking new long positions if shares move
above near-term resistance at $43.00.  In the news today, AG
Edwards raised BSX's price target from $44 to $50.  The firm
believes that operating expenses (as a percentage of sales) will
begin to decrease over the next several years.

Picked on December 20th at $44.01
Results since picked:       -1.02
Earnings Date            10/22/02 (confirmed)




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

Deluxe Corp. - DLX - close: 42.06 change: -0.04 stop: 42.56

Last week we challenged DLX with a tight stop-loss at $42.56.
The stock approached this level on Tuesday but wasn't able to
move above $42.24.  With shares closing above $42.00, it seemed
as if any more broader market gains would lead to a violation of
our stop.  But lo and behold, DLX actually posted a loss on
Thursday.  Deluxe was one of a handful of S&P 500 stocks that
finished in the red.  There was no news to explain this relative
weakness.  Technically, we like how the stock hasn't broken its
multi-month trend of lower highs.  A downside violation of
today's Inside Day formation would open the door for a test of
support at $40.00.  Of course, we're not out of the woods yet.
More gains in the broader market on Friday could send DLX back to
the $42.50 area.  Since DLX hasn't yet broken down, we would not
recommend entering any new positions at current levels.

Picked on December 4th at $41.28
Results since picked:      -0.78
Earnings Date           10/17/02 (confirmed)





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

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

American Intl. - AIG - cls: 60.30 chg: +2.45 stop: 60.11

Every single sector index that we monitor finished in the green
on Thursday.  Given these large gains across the board, it wasn't
surprising to see the IUX.X insurance index tack on 3.1%.  AIG
outperformed the IUX and moved higher by 4.2%.  With the stock
tumbling to multi-week lows last week, we lowered this play's
stop to $60.11.  We figured the bulls would have their work cut
out for them if AIG was going to bounce from the $57.00 area and
then move above resistance at $60.00.  As a matter of fact, the
stock even hit a relative low of $56.05 on Tuesday morning.
Unfortunately today's broader market gains were more than the
bears could handle.  AIG retraced the previous week's losses,
moved through resistance, and finished at the highs of the day.
Our play was stopped out for a gain of 1.1%.  Traders who gave
AIG more breathing room may want to consider using a stop just
above last week's high of $60.50.  Although it's unclear whether
today's rally will have any staying power, the technical strength
shown by the rising daily stochastics and MACD is a sign that
shares have additional upside potential.

Picked on December 6th at $60.80
Results since picked:      +0.69
Earnings Date           10/24/02 (confirmed)






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

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

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

Cephalon Inc - CEPH - close: 49.77 change: +1.10 stop: 52.64

There was no post-new year's hangover for the bulls.
Enthusiastic buying sent the NASDAQ sharply higher on Thursday.
This tech strength helped to propel the BTK.X biotech index to a
3.0% gain.  Shares of CEPH lagged the index and finished in the
green by 2.2%.  Interestingly, the intraday range was nearly
identical to Tuesday's, with shares once again finding resistance
at $50.00.  We're pretty impressed with the fact that the bears
were able to defend this level while the overall market was
moving higher.  Additional resistance looms overhead at the
descending 200-dma ($50.26).  Very conservative traders may want
to use a stop slightly above that moving average.  Our stop-loss
remains set at $52.64.  On Friday we'll be looking for CEPH to
move back towards the relative low of $47.76.  New entries can be
evaluated on a move below that level.

Picked on December 30th at $48.77
Results since picked:       -1.00
Earnings Date            11/06/02 (confirmed)






=================================================================
Split Trader / Stock Splits (ST) section
=================================================================

===============
ST Play Updates
===============

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

Forest Labs - FRX - close: 100.00 change: +1.78 stop: 95.98

After pulling a disappearing act in December it looks like the
bulls are back on Wall Street.  Unless of course you're a more
jaded market watcher who merely saw today's action as the
beginnings of a short squeeze.  Whatever your view of the market
if you're long FRX you're probably feeling better.  The stock
rallied $1.78 today to close exactly at its high for the day and
at psychological resistance of $100.00.  This helped produced a
bullish crossover signal in the stock's MACD.  Additional
oscillators also look positive.  This last week we've been
encouraged by the strength shown by FRX or more correctly its
lack of weakness considering the shortened trading week and the
dearth of traders.  After the bell Forest Labs offered investors
more good news.  The company said that its fiscal Q3 earnings
numbers should beat the street estimates by 15%.  FRX is set to
report earnings on Jan. 16th, 2003.  First Call's earnings
consensus for FRX is $0.77 a share.  FRX is expecting about 89
cents.  The company said that the results would be due to strong
net sales volume of about $585 million for the quarter.  The
majority of the quarter's sales are from its antidepressant
Celexa with $370 million and almost $80 million from its recently
released antidepressant Lexapro (which hit the market in
September).  The stock was halted in after hours trading due to
the news.  This earnings news could really propel shares higher
tomorrow assuming the broader markets don't give back all of
today's gains.  Keep in mind that while this is very encouraging
for shareholders and the stock could witness a boost but be
careful not to chase the stock if it gaps up too high Friday
morning.  Traders looking for a short-term move might want to
consider two potential entry points.  One would be a move above
today's high and the $100 mark while the other would be to wait
for the share price to trade above its 50-dma ($100.77), which
has been acting resistance for the last month.  An upside
breakout above the 50-dma might just give bulls enough room to
push FRX to the $106-$108 area.  The stock's 2-for-1 stock split
is due to occur next Wednesday.  The Premier Investor Newsletter
will probably drop the stock on Tuesday afternoon near the close
(our official exit will be Tuesday's close) but there is the
possibility that we'll keep the play open and risk any post-split
depression since FRX will be announcing earnings just a week
later.  We'll post the decision to close or keep the play open in
Monday night's newsletter.

Annotated chart of FRX (01/02/03)



Picked on December 24th at $100.26
Gain since picked:           -0.26
Earnings Date             10/15/02 (confirmed)







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