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Daily Newsletter, Tuesday, 01/14/2003

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PremierInvestor.net Newsletter                 Tuesday 01-14-2003
                                                   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:      Finally Over 8800
Market Sentiment: Crossing the Barrier
Play-of-the-Day:  What A Drag For the Bears!

-----------------------------------------------------------------
U.S. Market Numbers
-----------------------------------------------------------------
MARKET WRAP  (view in courier font for table alignment)
-----------------------------------------------------------------
      01-14-2003           High     Low     Volume Advance/Decline
DJIA     8842.62 + 56.60  8843.37  8746.35 1.65 bln   1948/1307
NASDAQ   1461.01 + 15.00  1461.12  1442.63 1.49 bln   1936/1356
S&P 100   474.31 +  3.48   474.31   468.55   Totals   3884/2663
S&P 500   931.66 +  5.40   931.66   921.72
W5000    8793.17 + 47.50  8793.17  8706.82
RUS 2000  398.72 +  2.27   398.45   395.11
DJ TRANS 2382.72 -  4.70  2388.94  2369.74
VIX        26.55 -  0.97    27.78    26.55
VXN        41.92 +  0.18    43.75    40.94
Total Volume 3,281M
Total UpVol  2,283M
Total DnVol    937M
52wk Highs  232
52wk Lows    67
TRIN       0.85
PUT/CALL    .70
-----------------------------------------------------------------

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

Finally Over 8800

Fear of Intel sent the bears into short covering mode just
before the bell and the Dow made its first close over 8800
since Dec-2nd. After more than a week of breaking and then
falling below that number the average finally managed to
make it stick. The key now is how long will it hold.

Dow Chart - Daily


Nasdaq Chart - Daily


The headline economic numbers this morning came from yet
another look at retail sales for December. The last look
at the December numbers showed that sales overall were +1.2%
including autos. Without the auto gains sales were flat for
the month. Sales at auto dealers and parts stores soared
+5.5% for the month on top of a +2.6% rate the prior month.
This shows consumers were taking advantage of their home
refinancing bonus by purchasing cars and accessories. The
consumer is still holding up the economy but unemployment
and risk of war is slowing the broader pace.

The Richmond Fed Survey came in at -3, down two points
from last month. This shows that manufacturing activity
remained weak in November. The new order component remained
flat at 4 and but the order backlog improved slightly. This
is not a signal that the risk of a double dip has passed
but it also does not indicate that the economy is plunging
headlong into the abyss either.

The economic reports were ignored due to heavy rumor
activity. There were so many rumors flying the commentators
had to list them in order of appearance to keep them straight.
There was the rumor that Russia was going to allow Saddam
to flee in exile to avoid a war. Libya was also rumored to
be accepting $3 billion to allow Saddam to take up residence
in that country. Egypt was also reported to be making
preparations for his arrival. All of these were eventually
denied but the possibility of an exile to prevent the war
helped lift the markets.

There were also comments by Hans Blitz that they had found
weapons in Iraq. Then is was refined to be that Iraq had
smuggled weapons. Later it was said that these weapons had
disappeared then it was said it was the same weapons the
inspectors had known about 10 years ago. Literally there
was a different version of all the rumors pounding the
market about every 15 minutes. There were several rumors
that Iraq had told the inspectors to leave the country.
There were rumors that the U.S. had told them to leave
by Feb-12th. All denied. By the end of the day the
general consensus of opinion was that Blitz had found
them in violation of the directives on several counts.
News programs ran countless sound bites of President Bush
on the verge of losing his temper and complaining about
being "sick and tired" of Iraq's games and that time had
run out. Add to that the new pictures of ships and troops
leaving for the gulf and the bullish morning was quickly
crushed. Other challenges were a bomb found in a Paris
cathedral, a plot for a car bomb at JFK and several more
attempted terrorist arrests in Europe. Still nothing
could keep the market down.

Worse than the Retail Sales report was news that Kmart
would close another 326 stores and terminate up to 37,000
more employees. Remember Kmart? The low cost, no frills
cross between Sears and a dime store said they were going
to keep 1500 stores open and still employ 168,000 if the
bankruptcy plan was approved. Martha Stewart's main
outlet may not be done. They said more cutbacks could be
needed in order to compete with Wal-Mart. Kmart closed
283 stores last year and fired 22,000 workers. Sounds
like a duel is in order. We need the WMT and TGT CEOs to
sit down at a table for one game of stud poker. Winner
gets Kmart, loser gets MSO.

The market traded in a very narrow range most of the day.
It was not until the end of the day that fear of an Intel
surprise caused the bears to cover. Intel did beat the
street by two cents but the reaction was far from exciting.
Buried in their guidance was a drop in capital expenditure
spending to between $3.5 and $3.9 billion and well below
the $5 billion whisper number analysts had expected. The
chip equipment makers suffered in after hours as a result.

The outlook was inline with estimates for revenues to be
flat or show a slight decline in the 1Q. The weakness is
seasonal and not a problem. However, CFO Andy Grove was
far from bullish in a TV interview. He said Intel benefited
from better than expected sales of high end processors in
the 4Q with strength coming from overseas. He said the 1Q
was going to be seasonally weak but twice he said he "saw
no signs of a recovery at all". Business was still moving
but he saw no improvement. The stock dropped initially on
the capital expenditure changes but recovered to close up
slightly in after hours trading.

That leaves us with earnings from three other major tech
stocks on Thursday. MSFT, IBM and SUNW will announce
after the close. With Intel, the primary piece in the PC
food chain, saying there are no signs of a recovery the
chances for those companies to produce a major upside
surprise is slim. We already have serious indecision
between the bulls and the bears. What the bulls heard
tonight should not give them much cause for hope in the
short term.

The very flat trading range is a problem for analysts.
Professional traders want to see strong volume with good
follow through on rallies. We did not get that. We have
been running in place for a week while we wait for the
earnings. Only the short covering prior to the close
powered the Dow over 8800. We have now seen the leading
edge of the tech sector say there was no recovery in
sight. The bulls lost one leg of their support and will
now find it harder to rally buyers for the long term.

Make no mistake. Closing over 8800 was a key point, just
possibly not key enough. The 200 EMA is lurking just
above at 8853 and the 200 SMA is 8919. Both should be
strong resistance. Futures are positive at 8:PM and
odds are good we are going to get a positive open as
long as there are not any negative news events overnight.
What will be key is the holding power of any gains. If
we end up back below 8800 at the close on Wednesday then
I would be extremely wary. We don't need to add triple
digit gains every day to keep the rally going. Just
knock off one resistance level at a time until we
break 9050 and the party could begin. There are a lot
of roadblocks between 8842 and 9050 so don't start
counting your chickens just yet. With every earnings
report bulls will lose another reason to buy. The
short term reasons to buy will diminish more with every
"no recovery yet" guidance statement. It is critical
the bulls capture as much high ground as possible this
week and then fight like heck to hold it. If we did
get negative guidance from one of the big three on
Thursday things could get grim. Instead of the bulls
playing king of the mountain they are going to feel
like Custer with a mountain of Indians riding down
to visit at Little Big Horn. Got your ammo ready?

Enter Very Passively, Exit Very Aggressively!

Jim Brown
Editor


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

Crossing the Barrier

A reader sent me an e-mail reminding me of the saying "never
short a dull market."  That would seem to apply to today's
action.  The lesson is highlighted by the fact that we got some
bad news to start the day and yet the market still found buyers
on the morning dip.  We started out with a worse than expected
retail sales report for the month of December that showed a
measly gain of only 1.2%.  Excluding auto sales, which have
continued to benefit from zero-percent financing, sales were
flat.  It was the worst data since the early 1990s.  However, if
consumers are still spending on cares, does it matter that they
aren't spending in the malls. There is only so much money to go
around and if we are simply seeing a temporary shift to take
advantage of financing deals, then maybe the drop in other retail
areas is not as bad as it seems.   Retail sales account for a
third of final sales in the economy, so this is a sector to watch
closely.  The problem with the shift to autos is that these
stocks at some point will have to pay the piper for giving up a
previously profitable financing practice and that should be
reflected in earnings down the road. On top of that concern, the
data, even including auto sales, was still below expectations for
a gain of 1.5%.

Comments from chief weapons inspector Hans Blix regarding the
discovery of evidence about smuggled weapons in Iraq were
released shortly after the retail sales data, contributing to the
morning drop.  The dip buying seems to provide evidence that we
will once again test our December 2 highs, after the market has
shaken off a poor jobs report from last week, high unemployment,
geo-political concerns and poor retail data. However, without a
new catalyst, it seems we are stuck in a rut, with the Dow
hovering around 8800 and the SPX sitting at just about 930.  The
closes above those levels, at Dow 8842 and SPX 931.66, are
significant in that after seemingly running out of steam below
those levels, we have finally managed to get over the hump and
may now find support at previous resistance.

The 0.3% drop in department store sales hasn't helped many
retailers, but apparently things are starting to turn around for
beleaguered Kmart (KMRTQ).  The company said it expects to come
out of bankruptcy protection by the end of April.  It will issue
new stock to its creditors that will effectively wipe out the
value of current shares.  In addition, the company posted its
first quarterly profit since entering bankruptcy, in spite of a
same store sales decline of 5.7%.  Now the bad news for the
economy.  Kmart will be closing another 326 stores and cutting up
to 35,000 jobs.  The cuts are not unexpected, but simply
highlight the difficulties the economy is facing after a terrible
December payrolls report that showed a loss of 101,000 jobs,
instead of the expected gain of 32,000.  The Kmart news alone
could have wiped out all of December's expected gain.

With a relatively small trading range for most of the afternoon,
the markets went into a holding pattern ahead of Intel's earnings
release.  The Semiconductor Index got a slight boost by the end
of the day, as investors were betting on positive comments. The
SOX finished at 336, which is above support at 330, but below
340, which served as resistance before Monday morning's spike
level to 348.  Intel beat estimates by $0.02 per share and also
posted revenue that was higher at $7.16 billion than expectations
of $6.9 billion.  The company also said it expects first quarter
revenue of $6.5-$7 billion, which was above expectations of $6.6
billion.   The stock traded as high as $18.18 after hours before
settling at $17.92, which is just above the close of $17.79. The
50-dma sits at the after hours high of $18.18.  If the after
hours range is any indication, traders were waiting to short the
good news.  However, with IBM and Microsoft releasing earnings on
Thursday, the Intel reaction should carry weight for only a
couple of days before traders turn their attention elsewhere.

Now that we are over the Dow 8800 and SPX 930 hump, traders can
look first for a test of the descending 200-dmas at 8919 and
948.42.  The other important 200-dma is that in the OEX.  The OEX
closed at 474.31 and has the 200-dma sitting just above it at
476.21.  We may see any or all of these tested tomorrow following
the Intel results.  If we are able to get through those averages,
then expect another run at the December highs in the Dow at 9043
and SPX 954.  The OEX 200-dma test is not a foregone conclusion,
however, as the last time an upside breakthrough led to a
continued rally was in October 1998. It has penetrated the
average to the upside several times during the bear market,
however the rallies have been short lived. If we do break through
and continue higher, bulls can look to jump in after crossing the
December highs.  More conservative traders may want to wait for a
test of Dow 9000 as support.
-----------------------------------------------------------------

Market Averages

DJIA ($INDU)

52-week High: 10673
52-week Low :  7197
Current     :  8842

Moving Averages:
(Simple)

 10-dma: 8682
 50-dma: 8599
200-dma: 8917

S&P 500 ($SPX)

52-week High: 1176
52-week Low :  768
Current     :  931

Moving Averages:
(Simple)

 10-dma:  916
 50-dma:  907
200-dma:  948

Nasdaq-100 ($NDX)

52-week High: 1734
52-week Low :  795
Current     : 1094

Moving Averages:
(Simple)

 10-dma: 1055
 50-dma: 1048
200-dma: 1059
-----------------------------------------------------------------

The Semiconductor Index (SOX.X):  The SOX hovered between support
and resistance all day, awaiting Intel's (INTC) announcement
after the bell. The company beat both earnings and revenue
estimates, as well as raising future revenue guidance.   With all
that bullishness, INTC finished up only a few pennies after
hours. Traders can watch recent resistance levels at 340 and 350
in tomorrow's trading action.  If it can crack 350, then we will
likely re-test the August resistance level at 365-368.  That
August resistance would coincide with the descending 200-dma at
369.50.  The SOX hasn't seen its 200-dma since a failed bounce
attempt in May 2002, when it sat up at 532.  If we instead fall
on the Intel results, which seems unlikely (but stranger things
have happened following earnings), then look for continued
support at the 50-dma of 323, which served as a bounce point on
the last pullback.

52-week High: 657
52-week Low : 214
Current     : 336

Moving Averages:
(Simple)

 10-dma: 323
 50-dma: 323
200-dma: 369
-----------------------------------------------------------------

Market Volatility

The VIX is once again flirting with support at 26.  The recent
market rally has led to repeated tests of this level and the
close over Dow 8800 and SPX 930 should only ease downside fears
and push the VIX lower if the rally holds. A real volatility
breakdown will occur if we are able to push above the December
highs in the broader indices and dare I predict we could see a
low in the teens if that occurs.

CBOE Market Volatility Index (VIX) = 26.55 -0.97
Nasdaq-100 Volatility Index  (VXN) = 41.92 +0.18
-----------------------------------------------------------------

          Put/Call Ratio  Call Volume   Put Volume

Total          0.70        657,834       457,876
Equity Only    0.56        523,934       293,095
OEX            1.42         20,781        29,561
QQQ            1.08         48,295        52,159
-----------------------------------------------------------------

Bullish Percent Data

           Current   Change   Status
NYSE          53      + 1     Bull Confirmed
NASDAQ-100    66      + 1     Bull Confirmed
Dow Indust.   57      + 0     Bull Confirmed
S&P 500       62      + 0     Bull Correction
S&P 100       60      + 1     Bull Confirmed

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  0.92
10-Day Arms Index  0.88
21-Day Arms Index  1.25
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       1736          1149
NASDAQ     1848          1297

        New Highs      New Lows
NYSE        110              18
NASDAQ       89              15

        Volume (in millions)
NYSE       1,640
NASDAQ     1,510
-----------------------------------------------------------------

Commitments Of Traders Report: 01/07/02

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 slightly, while reducing
shorts by 7,000 contracts.  Small traders added 4,000 long
contracts, while also adding 8,000 short contracts.

Commercials   Long      Short      Net     % Of OI
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%)
01/07/03      411,542   455,538   (43,996)   (5.1%)

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
12/17/02      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%
01/07/03      143,169    83,895    59,274     26.1%

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 added 6,000 long contracts, while adding 4,000
shorts.  Small traders left long positions basically unchanged,
while increasing shorts by 3,400 contracts, or 68%.


Commercials   Long      Short      Net     % of OI
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%)
01/07/03       37,966     48,156   (10,190) (11.8%)

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
12/17/02       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%
01/07/03       19,708     8,453    11,255    40.1%

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 left positions relatively unchanged, while small
traders increased short positions by 1800 contracts.

Commercials   Long      Short      Net     % of OI
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%
01/07/03       16,210    11,333    4,877      17.7%

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
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%)
01/07/03        4,963     8,334    (3,371)   (25.4%)

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 BULLISH non-tech play))
===============

RJ Reynolds - RJR - close: 45.27 change: +0.83 stop: *text*

Company Description:
R.J. Reynolds Tobacco Company is the second-largest tobacco
company in the United States, manufacturing about one of every
four cigarettes sold in the United States. Reynolds Tobacco's
product line includes four of the nation's 10 best-selling
cigarette brands: Camel, Winston, Salem and Doral. (source:
company press release)

Why We Like It:
Shares of RJ Reynolds formed a short-term bottom at $39.20
earlier this month after competitor Phillip Morris announced
price cuts for wholesale retailers of its core brand cigarettes.
Investors in both RJR and MO initially balked at the possibility
of a price war that could eat away at the company's bottom lines.
However, these concerns seemed to evaporate rather quickly.  RJR
in particular has staged a powerful comeback from its recent
lows.  Following a week-long uptrend, the stock reached multi-
month highs today after breaking above resistance at $45.00.
Although the extended daily stochastics are hinting that the
uptrend might lose momentum, the bullish MACD and quadruple-top
p-n-f buy signal indicate that RJR should continue its ascent.
This outlook is bolstered by the fact that the stock has no clear
levels of overhead resistance until the July lows near $49.00.
We believe RJR will be able to clear this level, retrace the
steep September losses, and move to our official profit-target at
$49.94.

You'll notice from the earnings date listed below that RJR will
announce their quarterly results next Thursday (before the bell).
Because we'll probably be closing this play prior to the
announcement, longer-term traders may want to look elsewhere for
a possible trade.  Our objective is simply to ride RJR higher
over the next 5-6 days before bailing out of this hypothetical
trade with some nice gains.  Although those with a longer-term
timeframe could still think about going long, we would not advise
taking full positions until after the earnings announcement.  As
a precautionary measure we will place our action point for this
play at $45.33, one cent above today's high.  If we're triggered
our stop will be placed at $42.98.  This sets up a risk/reward
ratio of roughly 1:2.  More aggressive traders could use a stop
slightly below $42.00.


Annotated chart - RJR:



Picked on January xxth at $xx.xx <-- see text
Results since picked:      +0.00
Earnings Date           01/23/03 (confirmed)







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in making an informed decision regarding trading in stocks. It
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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 01-14-2003
                                                    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
  Bullish Play Updates:  BBH
  Bearish Play Updates:  TDS

Stock Bottom / Active Trader
  New Bullish Plays:     RJR
  Bullish Play Updates:  BSX, CI, SYK
  Bearish Play Updates:  DLX

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

Biotech HOLDRS - BBH - close: 91.00 change: -0.20 stop: *text*

As could be expected, the broader tech sector traded in a holding
pattern ahead of this afternoon's earnings announcement from
Intel.  The NASDAQ traded in a narrow 19-point range before
finishing with a 1.0% gain.  Meanwhile, the BTK.X biotech index
tacked on a couple points and moved above its 200-dma at 365.55.
The BBH, however, posted a small loss after rolling over below
resistance at $92.00.  This bearish divergence versus the BTK.X
can be attributed to small losses in two of the largest HOLDR
components: AMGN (-0.81%) and BGEN (-1.4%).  Technically, sector
bulls can be pleased with today's breakout in the BTK.X.  This is
an indication that it may only be a matter of time before the BBH
reaches our primary entry trigger at $92.12.  Remember that
conservative traders may want to only take a half position on a
move above that level, and then move into a full position if the
stock moves above $93.00.  Of course if shares see a more
extended pullback we're also willing to enter the play using our
secondary entry strategy, which we outlined in last night's
write-up.

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




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

Telephone Data Systems - TDS - cls: 47.03 chg: +1.27 stop: 47.11

The markets appear to have turned against the bears and Intel's
earnings report tonight after the bell may put the bears on the
defensive letting the bulls run yet again.  We're not predicting
any short or long term trends in the broader markets right here
but the stronger than expected news from Intel after the bell
tonight will likely give the NASDAQ stocks and associated tech
and telecom sectors a pop tomorrow (Wednesday).  Speaking of
telecom sectors, shares of TDS were probably boosted by the
positive news from Alacatel (ALA).  French telecom company, ALA,
came out today with a much improved Q4 earnings forecast, which
lifted the entire telecom sector.  The downward trend in TDS is
still in effect but the short-term spike higher will likely
continue and we expect to be stopped out tomorrow near the open
at $47.11.  Shares of TDS continue to have overhead resistance at
$48 and stronger again at $50 (along with its 50-dma at 50.60).
Traders looking for bearish trades in TDS may want to keep an eye
on these levels and look for a failed rally at resistance.  We
would prefer a new entry at with a failed rally at the $50 level.
Keep in mind that if more telecom earnings reports continue to be
positive then be wary of shorting TDS ahead of their own earnings
report in early February.

Picked on January 10th at $43.40
Results since picked:      -3.63
Earnings Date           02/05/03 (unconfirmed)






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

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

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

RJ Reynolds - RJR - close: 45.27 change: +0.83 stop: *text*

Company Description:
R.J. Reynolds Tobacco Company is the second-largest tobacco
company in the United States, manufacturing about one of every
four cigarettes sold in the United States. Reynolds Tobacco's
product line includes four of the nation's 10 best-selling
cigarette brands: Camel, Winston, Salem and Doral. (source:
company press release)

Why We Like It:
Shares of RJ Reynolds formed a short-term bottom at $39.20
earlier this month after competitor Phillip Morris announced
price cuts for wholesale retailers of its core brand cigarettes.
Investors in both RJR and MO initially balked at the possibility
of a price war that could eat away at the company's bottom lines.
However, these concerns seemed to evaporate rather quickly.  RJR
in particular has staged a powerful comeback from its recent
lows.  Following a week-long uptrend, the stock reached multi-
month highs today after breaking above resistance at $45.00.
Although the extended daily stochastics are hinting that the
uptrend might lose momentum, the bullish MACD and quadruple-top
p-n-f buy signal indicate that RJR should continue its ascent.
This outlook is bolstered by the fact that the stock has no clear
levels of overhead resistance until the July lows near $49.00.
We believe RJR will be able to clear this level, retrace the
steep September losses, and move to our official profit-target at
$49.94.

You'll notice from the earnings date listed below that RJR will
announce their quarterly results next Thursday (before the bell).
Because we'll probably be closing this play prior to the
announcement, longer-term traders may want to look elsewhere for
a possible trade.  Our objective is simply to ride RJR higher
over the next 5-6 days before bailing out of this hypothetical
trade with some nice gains.  Although those with a longer-term
timeframe could still think about going long, we would not advise
taking full positions until after the earnings announcement.  As
a precautionary measure we will place our action point for this
play at $45.33, one cent above today's high.  If we're triggered
our stop will be placed at $42.98.  This sets up a risk/reward
ratio of roughly 1:2.  More aggressive traders could use a stop
slightly below $42.00.


Annotated chart - RJR:



Picked on January xxth at $xx.xx <-- see text
Results since picked:      +0.00
Earnings Date           01/23/03 (confirmed)





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

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

Boston Scientific - BSX - cls: 43.40 chg: -0.87 stop: 41.63

Boston Scientific announced on Tuesday morning that it had taken
a stake in TriVascular Inc, a privately-held medical device
company.  TriVascular makes an experimental catheter to aid in
stenting procedures.  While terms of this agreement were not
announced, investors did not appear to be pleased.  BSX gapped
down at the opening bell and trended lower throughout the
session, ultimately closing near the worst levels of the day.
The stock may also have also been affected by an analyst
conference that Boston Scientific held today.  However, we were
unable to track down any noteworthy news coming out of this
meeting.  On a technical basis, the stock's violation of short-
term support at $44.00 is not encouraging.  This has taken BSX
out of its ascending regression channel.  Of course, it's worth
noting that the last violation of the channel in late-
December/early-January was quickly met with buying. The next
level of support lies at the rising 50-dma ($41.89).  With the
daily stochastics heading lower, we would not advise targeting
entries at current levels.  Our stop is slightly below this
moving average.  BSX has confirmed they will announce earnings on
February 4th.

Picked on December 20th at $44.01
Results since picked:       -0.61
Earnings Date            02/04/03 (confirmed)




---

Cigna Corp. - CI - close: 45.75 change: +1.14 stop: 40.80

The third time was the charm for CI.  Shares broke out above
$45.00 on Tuesday after butting their head against that
resistance level during the previous two sessions.  Our long play
was triggered at $45.01.  You could almost visualize the shorts
running for cover as CI moved higher for most of the day and
reached a multi-month high of $46.69.  The stock finished with a
2.5% gain after pulling back towards the end of the session.
Shares also showed good relative strength versus the IUX.X
insurance index, which moved to a new short-term high.  The index
seems to be on course to test overhead resistance at 275.  With
CI now moving into the October 25th gap, we'll be looking for a
rally up to the $57.00 area.  New entries could be targeted on a
move above today's high or on a pullback to $45.00.  In terms of
risk management, you'll notice that we've given this play plenty
of breathing room with a stop at $40.80.  Those looking for a
little less downside risk could use a stop slightly below the 21-
dma at $42.71.

Picked on January 14th at $45.01
Results since picked:      +0.74
Earnings Date           02/07/03 (confirmed)




---

Stryker Corp - SYK - close: 67.52 change: -0.68 stop: 66.74 *new*

Stryker of late has developed a bearish tendency to trace lower
highs on the daily chart.  This was the case again on Tuesday
morning, as shares quickly moved lower before basing out near
last week's low.  The early-session weakness came in spite of a
Monday evening press release from Moody's, who said that it may
raise Stryker's debt rating.  There was no apparent news to
explain the decline.  However, we did notice that shares of
competitor Zimmer (ZMH) have come under fire during the past two
sessions.  This selling may be rubbing off on Stryker.  Although
the recent downtrend is disconcerting, shareholders can be
pleased with the fact that SYK has thus far managed to find
buyers in the $67.25 area, which happens to coincide with
previous resistance at the early-November highs.  At this point
we're going to take a defensive approach and raise our stop to
$66.74.  This should keep potential losses to a manageable level,
while also forcing SYK to trade below support.  Slightly more
aggressive traders can maintain a stop-loss just below the 50-dma
at $65.56.  Stryker announces earnings on January 27th.

Picked on January 3rd at $68.26
Results since picked:     -0.74
Earnings Date          01/27/03 (confirmed)




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

Deluxe Corp. - DLX - close: 40.26 change: -0.69 stop: 42.56

Last Friday we were encouraged by the fact that DLX had fallen
out of its narrow multi-week trading range.  After continually
failing to push shares above the $42.25-$42.50 area, the bulls
finally threw in the towel and relinquished support near $41.25.
So far the stock has behaved just as we'd hoped it would.  DLX
underperformed the Dow Jones over the past two sessions and
continued to gravitate towards support at $40.00.  As we've said
in earlier updates, a violation of this level would provide an
opportunity to add short positions.  The recent relative weakness
bodes well for a breakdown.  The oscillators, on the other hand,
are a bit of a mixed bag.  Although the rolling MACD looks
promising, the latest declining price action has sent the daily
stochastics (5,3,3) into oversold territory.  This suggests that
shares might see some additional consolidation above $40.00.
However, we believe that a move below support would send DLX down
to the $38.00 area - regardless of the stochastics.  For the time
being our stop remains at $42.56.  Conservative traders may want
to use a break-even stop at $41.28.  Also note that Deluxe is
tentatively scheduled to release earnings on January 30th.

Picked on December 4th at $41.28
Results since picked:      +1.02
Earnings Date           01/30/03 (unconfirmed)





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

BFT     Bally Total Fitness         8.24     +0.56
WVCM    Wavecom ADR                15.10     +0.90
CRRC    Courier Corp               47.02     +0.54
AAII    AAI Pharma.                17.45     +2.51

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

CURE    Curative Health Services   17.07     +1.14
IDCC    Interdigital Comm.         16.52     +1.72
ALA     Alcatel                     7.15     +1.32
X       U.S. Steel                 16.53     +1.18
FTS     Footstar Inc                7.39     +1.33

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

JEC     Jacobs Engineering Group   39.03     +1.10
BRL     Barr Laboratories          76.97     +2.89
RMD     Resmed Inc.                33.87     +1.41
RSH     Radioshack Corp            21.93     +1.02
PCP     Precision Castparts        28.12     +1.46
COX     Cox Communications         32.15     +1.45
BLUD     Immucor Inc               24.90     +1.82

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

PPDI    Pharmaceutical Prod.       28.00     -1.04
DP      Diagnostic Products        35.92     -2.31
THO     Thor Industries            31.26     -1.94
OVER    Overture Services          28.14     -2.90
WYE     Wyeth                      37.60     -1.40
PHTN    Photon Dynamics            20.52     -6.13

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

ALOG    Analogic Corp              51.38     -1.37
NKE     Nike Inc                   46.68     -0.42
ABS     Albertson's Inc            23.14     -0.38
UOPX    University of Phoenix      37.93     -1.24




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