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Daily Newsletter, Tuesday, 01/07/2003

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PremierInvestor.net Newsletter                 Tuesday 01-07-2003
                                                   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:      Sell the News
Market Sentiment: Consolidation
Play-of-the-Day:  Game Over

-----------------------------------------------------------------
U.S. Market Numbers
-----------------------------------------------------------------
MARKET WRAP  (view in courier font for table alignment)
-----------------------------------------------------------------
      01-07-2003           High     Low     Volume Advance/Decline
DJIA     8740.59 - 33.00  8802.64  8713.03 1.93 bln   1289/1988
NASDAQ   1431.57 + 10.30  1442.26  1416.23 1.74 bln   1610/1791
S&P 100   467.84 -  1.90   471.83   465.90   Totals   2899/3779
S&P 500   922.93 -  6.08   930.81   919.93
W5000    8713.70 - 58.50  8781.71  8685.08
RUS 2000  393.95 -  3.05   397.36   391.19
DJ TRANS 2396.89 - 24.80  2421.58  2382.11
VIX        27.48 +  0.07    28.28    27.00
VXN        42.96 -  0.49    45.35    42.96
Total Volume 3.886M
Total UpVol  2,120M
Total DnVol  1,714M
52wk Highs  251
52wk Lows    61
TRIN       0.86
PUT/CALL    .66
-----------------------------------------------------------------

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

Sell the News

You saw it in real time. The president spoke, said several
things that would be bullish for the future and the result
was negative. Initially we saw a nice bounce back to 8800
but once the resistance was touched the direction was straight
down. Did that mean traders did not believe him? No, but the
news had been out for a couple days and this was the "is that
all?" result. Now we begin a long drawn out argument on the
proposals and several months before anything may become law.

Dow chart - Daily


Nasdaq chart - daily


The markets got off to a rocky start this morning after the
Factory Orders fell -0.8% in November. This was slightly more
than expected and was the third decline in the last four months.
Nondefense capital goods, which is a good indicator of private
investment, dropped -2.6%. Order backlog fell to the lowest
level since 1996. The broadest indicators seem to show that
consumer spending is continuing to slow and business investment
remains weak. This weakness throws additional doubt on the ISM
numbers from last week. A note on the ISM, the institute itself
was at a loss to explain why the number rocketed so high. This
leads traders to believe that it was an anomaly and the January
number could be much weaker again. The new stimulus plan will
have no immediate impact on Factory Orders as the real benefits
could take sometime to appear and they are directed at the
consumer.

On the positive side the Retail Sales index only dipped slightly
by -0.2% and was much better than analysts had expected. This
is causing the Bank of Tokyo, which tracks chain store sales,
to revise its total estimate of holiday sales due out Thursday.
They raised their estimates to +2% to +2.5% growth for the two
month holiday period. The rush of consumers back into the stores
to cash in gift certificates and holiday gift money was stronger
than expected. It is unknown yet what impact the returns will
have on the overall sales.

The Mortgage Bankers Association announced that the foreclosure
rate for the 3Q reached an all time high. The weak economy and
rising unemployment combined to push the rate to 1.15% in the
3Q. The previous high was 1.14% in 1999. They did say the rate
of loans moving into the foreclosure period had slowed slightly.
They said that foreclosures from sub prime borrowers, those with
prior credit problems, had fallen from 2.88% to 2.08%. The
association said it appeared those borrowers with unemployment
risk had already faced the challenge and without a second
economic dip the worst could be over for the industry. Now all
they have to do is find somebody with a job and credit to buy
those foreclosed homes. According to the recent home sales
numbers they should not have any trouble. The buyers are still
there if the price is right.

The big news today was the president's press conference. President
Bush proposed to reduce taxation on dividends, accelerate the
elimination of the marriage penalty, raise the child credit to
$1000 and place restrictions on the alternative minimum tax. A
total of $675 billion in tax reductions over the next ten years.
This package had been telegraphed over the last several days
and the market had already seen the bullish result on Monday.
The problems with the plan are several. First it has to be passed
and the Democrats are going to be pushing their plan instead.
It is going to be a long process and could take several months.
Secondly the majority of the benefits will take time to flow
through to the markets. Most investors are not taxed on dividends
anyway since they are invested in 401Ks or IRAs. This means
there is not a real and immediate benefit to individual investors.
There will be a long term benefit but not something immediately
visible to the markets.

Another challenge to the dividend plan is that it tends to
benefit value stocks instead of growth stocks. With investors
more interested in seeing CSCO hit $40 again instead of paying
a 25 cent dividend the movement in stocks could be minimal.
The biggest section of stocks, which will benefit will be banks
and utilities who already pay dividends. Many of the big tech
stocks made statements about their plans. Oracle said they
might consider a dividend plan. Dell also made some weak
comments about the possibility. Intel, which already pays a
minimal dividend, said they would review the plan IF the tax
cut was approved. Cisco, with $21 billion in cash on hand, had
just made a statement that said they would attempt to use their
cash to grow the business so don't expect a dividend there. MSFT,
with $40 billion in cash, did not rush to the press with news
of a pending change in their dividend views. MSFT likes to
award dividends in the form of stock splits at $120. Most
MSFT investors would love to see that happen again. The bottom
line for me is that the stimulus package will eventually be
better for the economy but do not expect a windfall any time
soon.

A windfall is what Gateway is going to need to get out of
trouble. They warned at the close that they would miss prior
estimates of a -.13 cent loss and would now lose -18 to -19
cents and depending on problems with a partner maybe even
3 cents worse than that. GTW fell to $2.95 in after hours
trading. The problem according to Gateway was weaker than
expected demand in the 4Q and they said that weak demand
was carrying over to the 1Q. Oops! Gateway said it was
looking at its 272 stores and may close some as leases
expire this year.

GE said today that members of the IUEW/Communication Workers
of America were going to hold a two day strike next week.
20,000 workers are protesting an increase in health care
co-payments. United Electrical Radio and Machine Workers will
also strike at the same time. GE increased the co-pay by $200
an employee for 2003 and said the cost of healthcare per
employee was +$2,350 higher than it was three years ago.

Despite all the good news and the multiple attempts to break
into positive territory the internals were still bad. The
new highs across all markets was the only really positive
indicator with 251 new highs compared to 61 new lows. The
declines still beat advancers 4:3. That is not a big ratio
but the indications were clear. Volume was very high with
nearly four billion shares traded. High volume, declines
over advancers and another dead stop at 8800 resistance.
The VIX is trading just above yesterday's low near 27 and
the TRIN is neutral at .86 as well as the Put/Call ratio
at .66. There just does not appear to be an overriding
reason to go long at this altitude. If anything it would
appear the +400 points gained in 2003 were at risk for profit
taking. The economic calendar for Wednesday has Consumer
Credit and Mortgage Applications as the only material events.
Thursday has Jobless Claims where we will get to see if the
holiday numbers were bogus and Chain Store Sales. Friday
is the important Nonfarm Payrolls and the real indicator
of economic health.

As an investor I would be concerned about the overhead
resistance just in front of earnings season. Alcoa is the
first Dow stock to announce earnings this week but next
week there will be a flurry of big companies. Nobody
knows how this will end. EMC raised estimates and GTW
warned. DYN raised guidance and Cigna lowered. Make no
mistake the 4Q was tough for most companies. There are
still those leading edge companies like EMC where even in
a flat economy usage of its products continues. We just
need to be guarded in our optimism even if the markets
appear bullish. The biggest drops tend to occur when all
the surface signals tend to be weakly positive after a
big run. If we do get a pull back on either bad news or
profit taking I see Dow 8650 as primary support with
8550 below that.

The most bullish index is the Nasdaq where the Compx has
risen to just above very strong resistance at 1425. This
is very bullish for techs if it can hold. Today's move
actually added +10 points to yesterday's very bullish
action. The Nasdaq has already added nearly +100 points
for 2003. Even if tech stocks were going to continue upward
the possibility of profit taking ahead of next weeks earnings
is strong. It appears the flood of retirement contributions
from the year end close is targeting the techs. When that
money runs out (4-10 days) there could be a serious dip.
Do your homework when placing bets and be sure to use
stops to protect your capital.

Enter Very Passively, Exit Very Aggressively!

Jim Brown
Editor


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

Consolidation
by Steven Price

The markets took a break today to digest the dueling economic
plans offered by the President and the democrats.  In spite of a
slew of pre-announcements, some of which were surprisingly
positive, the big rally of the last few days finally went into
consolidation mode.  The big question now is whether the
consolidation is just a breather before another leg up, or the
exhaustion of a bear market rally.

Monday's boost certainly was more than just fluff, as a removal
of the dividend tax sought by the President would make stocks
more attractive and create real value in the equity market.
However, the run up during the previous days seemed to be simply
an oversold bounce.  It really doesn't matter what the driving
force is, as long as we try to trade what we see. So far, we are
seeing support at a higher level and that's good news for bulls.
That support above Dow 8700 however, is up against some heavy
resistance and today's action showed that resistance still in
place at Dow 8800.  After topping out at 8800 on Monday, today's
high reached 8802 before failing.

Retail disappointments continued as Tiffany's lowered guidance,
based on sales trends and lower margins. The company said, " "We
believe that these holiday season results, which were below our
expectations, reflect the same consumer sentiments that are
adversely affecting other retailers in U.S. and international
markets."  Circuit City also announced that it saw a same store
sales decline of 6% in December and total sales decreased 5% in
the same month.  The stock actually posted a small gain,
following an announcement that it would buy back $200 million of
its shares.

Techs got a boost, partly due to EMC's news after the bell on
Monday that it was raising guidance.  The company said it would
earn $0.01-$0.02 per share, rather than the previously forecast
loss of $0.02. It also said that overall customer spending was
better than anticipated, leading to $200 million in additional
revenue above expectations.  That increased spending is probably
the most important part of the announcement, as it will be the
first sign of a turnaround for techs.

The president outlined his tax-cut plan mid-afternoon.  While
most of the details were already released Monday, he took the
opportunity to detail new cuts and the acceleration of old ones.
The markets got a boost when he got to the part about dividends,
but didn't show the new legs they might have if bulls were
looking for additional nuggets of information on which to hang
their hats.

The chip stocks continued higher again today, after Monday's run
took the Semiconductor Index (SOX) through an important level of
resistance at 330.  The index pulled back to closing support just
above that previous resistance and built on that gain today.
After trading as high as 343, the SOX closed at 333, indicating
the possibility of another run at the December high of 393.   It
was just a couple months ago that we were testing support at 200,
and after an 80% gain, then a move back to the mid-point, we have
climbed higher as reports of spending increases begin to leak out
of the tech sector.

The point and figure charts have shown some significant
developments the last couple of days, as well.  The Dow trade of
8800 actually broke through its descending bearish resistance
line at 8750 and must have bears worried about the strength of a
rally that can crack that barrier. The SPX trade of 930 also
broke that bearish resistance line, confirming the Dow move. Both
indices re-tested those levels today, and pulled back from them.
If we are seeing a double top the last couple of days, then the
bearish resistance breaks may have been the last gasp suckering
in a few more longs.  However, we have yet to get a reversal down
from those levels, which would come at Dow 8650 and SPX 915.
Until that time, we still have a series of higher highs and
higher lows.  On the other hand, the recent rally was not enough
to turn the sinking Dow bullish percent back up into a column of
"X."  The same goes for the SPX, OEX and NDX.  Until that
happens, we may simply be seeing the oversold bounce bears were
hoping for.
-----------------------------------------------------------------

Market Averages

DJIA ($INDU)

52-week High: 10673
52-week Low :  7197
Current     :  8740

Moving Averages:
(Simple)

 10-dma: 8506
 50-dma: 8564
200-dma: 8957

S&P 500 ($SPX)

52-week High: 1176
52-week Low :  768
Current     :  922

Moving Averages:
(Simple)

 10-dma:  898
 50-dma:  903
200-dma:  953

Nasdaq-100 ($NDX)

52-week High: 1734
52-week Low :  795
Current     : 1071

Moving Averages:
(Simple)

 10-dma: 1023
 50-dma: 1038
200-dma: 1068
-----------------------------------------------------------------

The Semiconductor Index (SOX.X): The SOX continued its upward
climb after breaking resistance at 330 on Monday.  That boost on
Monday followed an upgrade to chip equipment stocks from Deutsche
Bank, which rated the sector a BUY, saying that multiple delivery
and order pull-ins would lead to quarterly growth of 15% to 20%
versus than expectations of flat to 10 percent growth.  Monday's
broad market rally on the President's bigger than expected
dividend tax-reduction plan also helped boost the sector,
although not many chip stocks pay dividends.  However, many do
have cash reserves that would be cheaper to put into dividends if
the tax breaks make it through Congress.  The 330 level was one
of the more significant resistance levels throughout the first
part of December and the move over that mark could signal another
leg higher toward the August high resistance level of 365. The
SOX saw a high of 343, only to fall all the way back to 333 by
the close, mirroring the Nasdaq Composite's pullback from its
200-dma. If the COMP gets some new legs to break through the 200-
dma of 1439 on a closing basis, then look for the SOX make that
run to 365. If instead the COMP rolls over and the SOX fails to
hold 330, it could be a quick trip back to 310.

52-week High: 657
52-week Low : 214
Current     : 333

Moving Averages:
(Simple)

 10-dma: 307
 50-dma: 319
200-dma: 375
-----------------------------------------------------------------

Market Volatility

The VIX bounced off its lows after testing support at 26 the last
couple of days and could be signaling a market pullback as it
creeps higher.  It is viewed by some traders as a contra
indicator when it reaches extremes, and the big drop on the
equity rally may be signaling time for a turnaround.  It is still
at relatively low levels, indicating a lack of fear in the
market, but the last time it traded this low was the end of
November, just before we rolled over and sold off 800 Dow points.

CBOE Market Volatility Index (VIX) = 27.48 +0.07
Nasdaq-100 Volatility Index  (VXN) = 42.96 -0.49
-----------------------------------------------------------------

          Put/Call Ratio  Call Volume   Put Volume

Total          0.66        688,849       453,839
Equity Only    0.52        570,010       292,411
OEX            1.03         22,304        23,030
QQQ            4.22         50,016        25,902
-----------------------------------------------------------------

Bullish Percent Data

           Current   Change   Status
NYSE          52      + 0     Bull Confirmed
NASDAQ-100    62      + 3     Bear Alert
Dow Indust.   50      + 0     Bull Confirmed
S&P 500       61      + 2     Bull Correction
S&P 100       59      + 5     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  0.85
10-Day Arms Index  1.35
21-Day Arms Index  1.33
55-Day Arms Index  1.21


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       1109          1799
NASDAQ     1530          1719

        New Highs      New Lows
NYSE        121              23
NASDAQ      103              28

        Volume (in millions)
NYSE       1,904
NASDAQ     1,728
-----------------------------------------------------------------

Commitments Of Traders Report: 12/31/02

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 increased long positions, while reducing shorts, for
a net long change of approximately 7,000 contracts.  Small
traders increased shorts by 17,000 contracts, while leaving long
positions relatively unchanged.

Commercials   Long      Short      Net     % Of OI
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%)
12/31/02      410,968   462,782   (51,814)   (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
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%
12/31/02      139,383    75,640    63,743     30.0%

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 left positions close to unchanged. Small traders
increased longs significantly and reduced shorts slightly.


Commercials   Long      Short      Net     % of OI
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%)
12/31/02       31,399     44,387   (12,988) (17.1%)


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
12/10/02       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    49.0%
12/31/02       19,841     5,009    14,832    60.1%

Most bearish reading of the year: (10,769) - 06/11/02
Most bullish reading of the year:  14,832  - 12/31/02

DOW JONES INDUSTRIAL

Commercials added 1,000 contracts to their long positions, while
leaving shorts relatively unchanged.  Small traders increased
both positions slightly, with a slight reduction in the net short
position.

Commercials   Long      Short      Net     % of OI
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%
12/31/02       15,940    11,253    4,687      17.2%

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
12/10/02        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%)
12/31/02        4,997     6,553    (1,556)   (13.5%)

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 tech play))
===============

Electronic Arts - ERTS - close: 48.93 change: -3.07 stop: *text*

Company Description:
Electronic Arts, headquartered in Redwood City, California, is
the world's leading interactive entertainment software company.
Founded in 1982, Electronic Arts posted revenues of more than
$1.7 billion for fiscal 2002. The company develops, publishes and
distributes software worldwide for video game systems, personal
computers and the Internet. (source: company press release)

Why We Like It:
It's been a wild couple of days for shareholders of Electronic
Arts.  The stock rebounded with the NASDAQ late last week after
finding buyers near $50.00.  ERTS had moved to short-term highs
and seemed to be on course to retrace its mid-December selloff.
Monday's explosive NASDAQ rally provided the perfect climate for
some additional gains.  Instead, the stock posted a 4.6% loss.
This relative weakness can be largely attributed to poor sales of
Electronic Arts' "Sims Online" game, which was released on
December 17th.  The Sims franchise has been one of the biggest
moneymakers for ERTS and this particular version will have
thousands of subscribers paying monthly fees to play in the
game's virtual online world.  The weaker-than-expected initial
sales data, which was released this weekend, might portend a
bottom line disappointment for the leading videogame company.
This point was driven home today when Goldman Sachs said that the
firm's retail checks had been "generally below expectations."
Goldman's analyst also said that the overall videogame industry
might grow more slowly than expected in 2003.

These negative comments sent ERTS sharply lower in afternoon
trading.  When all was said and done the stock had fallen to new
52-week lows on the strongest volume in over two weeks.  The next
level of clear support is down at the late-2001 lows near $41.00.
The oscillators help to bolster the bearish technical picture,
with the daily stochastics (5,3,3) reversing at the middle range
and the MACD beginning to curl lower.  What's especially
intriguing about today's breakdown is the fact that ERTS is now
in danger of violating its 200-period moving average on the
weekly chart.  This level hasn't been violated in over five
years!  Previous pullbacks to the moving average were met with
buying.  A move below this level could precipitate another
downward leg.  With this in mind, we're going to place our entry
trigger at $47.89, 18 cents below the 200-pd MA.  This will also
ensure that ERTS has broken to new multi-year lows before we
activate our short play.  Alternatively, traders could also
evaluate entries on a failed rally at $50.00.  Our stop for this
play (if we're triggered) will be placed at $51.06.  Traders
using the alternate entry strategy could use a stop just above
today's high of $52.89.

Annotated weekly chart - ERTS:



Picked on January xth at $xx.xx <- see text
Results since picked:     +0.00
Earnings Date          01/29/03 (unconfirmed)







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Copyright ) 2003  PremierInvestor.net. and
The Premier Investor Network.
Do not duplicate or redistribute in any form.
PremierInvestor.net Newsletter                  Tuesday 01-07-2003
                                                    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
  New Bearish Plays:     ERTS
  Bearish Play Updates:  QCOM

Stock Bottom / Active Trader
  Bullish Play Updates:  BSX, SYK
  Bearish Play Updates:  DLX

High Risk/Reward
  Bearish Play Updates:  CEPH

Stock Trader / Stock Splits
  Closed Bullish Plays:  FRX
  Split Announcements:
                         MYL: 3-for-2 stock split

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 New Plays
============

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

Electronic Arts - ERTS - close: 48.93 change: -3.07 stop: *text*

Company Description:
Electronic Arts, headquartered in Redwood City, California, is
the world's leading interactive entertainment software company.
Founded in 1982, Electronic Arts posted revenues of more than
$1.7 billion for fiscal 2002. The company develops, publishes and
distributes software worldwide for video game systems, personal
computers and the Internet. (source: company press release)

Why We Like It:
It's been a wild couple of days for shareholders of Electronic
Arts.  The stock rebounded with the NASDAQ late last week after
finding buyers near $50.00.  ERTS had moved to short-term highs
and seemed to be on course to retrace its mid-December selloff.
Monday's explosive NASDAQ rally provided the perfect climate for
some additional gains.  Instead, the stock posted a 4.6% loss.
This relative weakness can be largely attributed to poor sales of
Electronic Arts' "Sims Online" game, which was released on
December 17th.  The Sims franchise has been one of the biggest
moneymakers for ERTS and this particular version will have
thousands of subscribers paying monthly fees to play in the
game's virtual online world.  The weaker-than-expected initial
sales data, which was released this weekend, might portend a
bottom line disappointment for the leading videogame company.
This point was driven home today when Goldman Sachs said that the
firm's retail checks had been "generally below expectations."
Goldman's analyst also said that the overall videogame industry
might grow more slowly than expected in 2003.

These negative comments sent ERTS sharply lower in afternoon
trading.  When all was said and done the stock had fallen to new
52-week lows on the strongest volume in over two weeks.  The next
level of clear support is down at the late-2001 lows near $41.00.
The oscillators help to bolster the bearish technical picture,
with the daily stochastics (5,3,3) reversing at the middle range
and the MACD beginning to curl lower.  What's especially
intriguing about today's breakdown is the fact that ERTS is now
in danger of violating its 200-period moving average on the
weekly chart.  This level hasn't been violated in over five
years!  Previous pullbacks to the moving average were met with
buying.  A move below this level could precipitate another
downward leg.  With this in mind, we're going to place our entry
trigger at $47.89, 18 cents below the 200-pd MA.  This will also
ensure that ERTS has broken to new multi-year lows before we
activate our short play.  Alternatively, traders could also
evaluate entries on a failed rally at $50.00.  Our stop for this
play (if we're triggered) will be placed at $51.06.  Traders
using the alternate entry strategy could use a stop just above
today's high of $52.89.

Annotated weekly chart - ERTS:



Picked on January xth at $xx.xx <- see text
Results since picked:     +0.00
Earnings Date          01/29/03 (unconfirmed)





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

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

QUALCOMM Inc - QCOM - close: 37.31 change: -0.06 stop: *text*

It really pays to use clearly-defined action points.  QCOM looked
like it would continue to decline after setting a fresh relative
low on Friday.  Monday's powerful broader market rally, however,
helped the stock to erase a large chunk of last week's losses.
Shares never approached our entry trigger at $35.38.
Interestingly, the one-day rebound took shares towards the top of
the descending regression channel.  This trendline, which
coincides with the 50-dma ($37.85), thwarted two intraday rallies
during Tuesday's session.  We'd expect shares to roll over from
this level if the NASDAQ begins to retrace its recent gains.
Today's relative weakness versus the semiconductor index (SOX.X)
and wireless index (YLS.X) supports this outlook.  Although we're
maintaining our trigger price, more speculative traders could
consider the alternate strategy of entering short positions if
shares head lower from current levels.  Remember that we'll use a
stop at $38.06 if this play is activated.

Picked on January xth at $xx.xx <- see text
Results since picked:     +0.00
Earnings Date          02/06/03 (unconfirmed)






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

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

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

Boston Scientific - BSX - close: 44.92 change: +0.25 stop: 40.99

With the market moving sharply higher on Monday, anything less
than new multi-year highs for BSX would've been a major letdown.
The stock met our bullish expectations and powered through
resistance at $44.25.  Today's trading saw shares move to another
high, in spite of a 1.5% pullback in the DRG.X pharmaceutical
index.  The next few days could be pivotal for this play.  BSX is
trading at the midline of its ascending regression channel, which
coincides with psychological resistance at $45.00.  Today's
strong finish (shares closed at the highs of the day) bodes well
for a move higher on Wednesday morning, as does the rising MACD.
New entries can be gauged on either a rally above $45.00 or a
pullback to $43.50.  Short-term traders may want to consider
taking profits if BSX rallies up to the 1999 highs at $47.00,
near the top of the regression channel.  Our stop remains at
$40.99, below the rising 50-dma at $41.23.

Picked on December 20th at $44.01
Results since picked:       +0.91
Earnings Date            10/22/02 (confirmed)




---

Stryker Corp - SYK - close: 68.40 change: +0.25 stop: 65.43

On Friday the stage seemed to be set for a rally to the $70.00
area.  SYK was trading at new all-time highs and had displayed
good relative strength.  Thus, one would expect that shares would
continue higher on Monday when the broader market was
experiencing a sizable rally.  However, this was not the case.
Shares actually finished the session with a small loss.  So what
gives?  As far as we can tell the lack of participation in
Monday's rally was largely a result of rotation into stocks that
had previously been beaten down.  Contrary to many of the stocks
that saw steep gains, SYK is in the midst of a multi-week
uptrend.  The stock may have been due for a pullback after moving
higher for four straight days.  But regardless of the reason for
the decline, the relative weakness is somewhat worrisome.  A move
to new all-time highs would help to alleviate these concerns.
Today's action was more promising, as SYK finished with a small
gain after bumping off of $69.00 for the second time in three
days.  A move above this level would provide an opportunity to
open new long positions.  After the closing bell today, Stryker
announced an agreement with Regeneration Technologies (RTIX) to
provide products used in sports medicine surgeries.  We don't
expect this news to have any material impact on how SYK trades
tomorrow morning.

Picked on January 3rd at $68.26
Results since picked:     +0.14
Earnings Date          10/16/02 (confirmed)




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

Deluxe Corp. - DLX - close: 42.16 change: +0.12 stop: 42.56

DLX missed our stop-loss by only four cents this afternoon.
Shares were looking somewhat weak on Monday when the bulls
managed only a small gain while the major market indices were
shooting higher.  It wasn't until this afternoon that the stock
was able to find traction and move above short-term resistance at
$42.10.  Shares approached our stop at $42.56 before drifting
lower with the Dow during the final 90 minutes.  The bearish
trend of lower highs that we discussed last week has been broken,
and we would not be surprised to see this play closed out on
Wednesday.  It's also possible that DLX could continue to move
sideways for several more days.  More directionless trading would
probably earn DLX a spot on the dropped list.  We've given the
stock more than a month to perform and thus far the bears haven't
been able to assert themselves.  This play will probably be
closed if DLX doesn't display some concerted downward action by
the end of the week.

Picked on December 4th at $41.28
Results since picked:      -0.88
Earnings Date           10/17/02 (confirmed)






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

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

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

Cephalon Inc - CEPH - close: 50.23 change: -0.96 stop: 52.64

Although the bears offered a spirited defense of Cephalon's 200-
dma last week, Monday's broader market rally was more than they
could handle.  During the middle of yesterday's session it
appeared as if CEPH might approach our stop-loss.  However,
shares faded the NASDAQ and trended slightly lower into the
close.  This morning's trading gave us another scare as shares
traded to an intraday high of $51.92.  Investors may have been
reacting to news that Cephalon had entered into a research
partnership with MDS Proteomics (MDZ).  These gains proved to
have absolutely no staying power.  Shares reversed course and
quickly moved into negative territory.  A failed rally near
$51.00 sent CEPH back down to previous resistance in the $50.00-
$50.25 area.  Shares showed relative weakness compared to the
BTK.X biotech index, which finished flat.  Looking at a 15-minute
chart, one can see that CEPH has developed a tendency to sell off
from its intraday highs.  If this trend keeps up we could soon
see shares retest the 100-dma at $48.00.  We would not recommend
new short positions until shares fall below this support level
and violate the relative low of $47.76.

Picked on December 30th at $48.77
Results since picked:       -1.46
Earnings Date            11/06/02 (confirmed)






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

===============
ST Closed Plays
===============

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

Forest Labs - FRX - close: 105.66 change: +0.07 stop: 104.79

It's true.  Timing is everything when it comes to trading.  Our
plan to exit at today's close may be right on schedule.  FRX is
due to split its stock 2-for-1 tomorrow morning at the open.
While odds are strong, given the recent earnings news, that
shares of FRX could receive fresh buying interest from investors
drawn to its lower share price, odds are stronger that the
markets could be due for a pull back.  First let's address the
common case of post-split depression.  Back in the market's
heydays when a strong stock issued a stock split investors
usually expected and more often than not witnessed a strong run
up in price ahead of the split.  Once the event occurred, the
momentum players moved on to their next trade and the newly split
shares were then subjected to a new round of selling pressure.
Occasionally, the story behind the stock was so strong that even
after the stock split shares would continue higher (short-term)
as new traders who didn't want to pay the higher price believed
these new lower-priced shares were more available to them.
Historically, stocks that do split tend to out perform their
peers by 9% to 10% over the next 12 months.  Closer to home,
traders need to also consider the broader market activity.  The
recent bullishness has been a breather from December's dreary
performance but many major averages are right at overhead
resistance.  Bulls would be ecstatic to see the markets breakout
and this is always a possibility but the safer bet would be to
count on some sort of consolidation of recent gains.  Therefore,
those investors who like FRX as a longer-term hold might do well
to look for a pull back to the $47.50-$50.00 levels before
considering new entries (shares should open somewhere near $52.80
tomorrow).  The PremierInvestor.net team will certainly keep our
eyes on FRX for new opportunities but we're closing this play out
with a hypothetical gain of $5.40 or 5.3%.  Don't forget that FRX
is expected to announce earnings on Jan. 16th, but this date is
unconfirmed.

Picked on December 24th at $100.26
Gain since picked:           +5.40
Earnings Date             01/16/03 (unconfirmed)





Split announcements
===================

Trading at all-time highs, Mylan announces a 3-for-2 split

Before the market opened this morning, Mylan Laboratories (NYSE:
MYL) announced that its Board of Directors had approved a 3-for-2
stock split.

The split will be distributed on January 27th to shareholders of
record on January 17th.

This split, which will be the tenth in Mylan's history, comes on
the heels of an explosive breakout.  Shares have been bid higher
on speculation that the company could get FDA approval of its
generic Synthroid medication earlier than expected.  MYL is
trading at all-time highs after breaking through the $34.50
resistance level in late-December.  The stock looks overdue for a
pullback after several consecutive up days, so traders thinking
about playing a split run may want wait for a pullback to the $34-
$36 area before considering long positions.

Shares closed at $37.98 on Monday.  For a current quote, click here:

http://user.financialcontent.com/pin1/quote.cgi?account=pin1&ticker=MYL

About the company
Mylan Laboratories Inc. is a leading pharmaceutical company that
develops, manufactures and markets generic and proprietary
prescription products. Mylan has two operating segments that
market an extensive line of generic and branded products through
four business units: Mylan Pharmaceuticals Inc., Mylan
Technologies Inc., UDL Laboratories, Inc. and Bertek
Pharmaceuticals Inc. (source: company press release)


=================
  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

ELBO    Electronics Boutique       17.21     +0.79
BG      Bunge Ltd                  25.46     +0.85
NDE     Indymac Bancorp            19.72     +0.62
INTL    Inter-Tel Inc              23.81     +1.07
FRDM    Friedman's Inc             10.58     +0.56
HKF     Hancock Fabrics            17.30     +1.01
---------------------------------------
Breakout to Upside (Stocks $5 to $20)
---------------------------------------
Ticker  Company Name               Close     Change
WEBM    Webmethods                 10.39     +1.31
BSG     Bisys Group                16.90     +1.65
GNSS    Genesis Microchip          17.01     +1.26
---------------------------------------
Breakout to Upside (Stocks over $20)
---------------------------------------
Ticker  Company Name               Close     Change

MATK     Martek Biosciences        26.82     +1.90
BRL      Barr Labs                 71.97     +2.50
PSFT     Peoplesoft Inc            21.15     +1.12
HYSL     Hyperion Solutions        30.35     +1.39
XLNX     Xilinx Inc                25.45     +1.21
COGN     Cognos Inc                25.27     +1.29
-------------------------------------------
Breakout to Downside (Stocks over $20)
-------------------------------------------
Ticker  Company Name               Close     Change

PII     Polaris Industries         56.10     -2.05
AZO     Autozone Inc               69.68     -1.38
TECH    Techne Corp                25.95     -1.24
WFMI    Whole Foods Market         50.87     -1.71
CTSH    Cognizant Tech.            67.05     -4.80
KSS     Kohl's Corp                53.55     -2.11
NBR     Nabors Industries          32.62     -2.53
-----------------------------------------
Recently Overbought With Bearish Signals (Stocks over $20)
-------------------------------------------
Ticker  Company Name               Close     Change

DRS     DRS Technologies           30.31     -0.49
GD      General Dynamics           79.85     -1.32




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