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Daily Newsletter, Thursday, 01/16/2003

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PremierInvestor.net Newsletter                 Thursday 01-16-2003
                                                    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:      Earnings Overload!
Play-of-the-Day:  Bears In Uniforms
Market Sentiment: Tide Shift


************************************************************
MARKET WRAP  (view in courier font for table alignment)
************************************************************
      01-16-2003           High     Low     Volume   Adv/Dcl
DJIA     8698.91 - 24.30  8805.52  8673.05 1.80 bln 1713/1516
NASDAQ   1423.77 - 14.40  1449.13  1420.11 1.51 bln 1463/1816
S&P 100   464.70 -  2.18   471.04   463.04   Totals 3176/3332
S&P 500   914.60 -  3.62   926.03   911.98
W5000    8650.96 - 29.00  8750.90  8627.94
RUS 2000  394.88 -  0.65   398.87   394.24
DJ TRANS 2372.28 + 11.80  2395.00  2359.31
VIX        27.67 -  0.19    28.51    27.09
VXN        44.80 +  1.35    45.85    44.43
Total Volume 3.505B
Total UpVol  1.162B
Total DnVol  2.299M
52wk Highs  262
52wk Lows    70
TRIN       1.51
PUT/CALL    .87
*************************************************************

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

Earnings Overload!

What a day! The market was hit by all sides with earnings
news, war news and economic news but still managed to trade
in a narrow range and finish with only a minor loss. Iraq
warheads were unable to do what earnings news after the
bell may have accomplished.

Dow Chart - Daily


Nasdaq Chart - Daily


The news overload is huge today and I will try and cover
only the hot spots in an effort to address the major issues.
Economically the country is still struggling. The CPI came
in slightly lower than expected and shows that inflation is
not the problem we should worry about. With falling prices
and no demand it appears that deflation is the major problem
ahead. Jobless claims fell to 360,000 from the expected 400,000
level but analysts were quick to claim January as a highly
volatile period. They did not expect that number to stick
and with rising announcements of layoffs in 2003 it should
increase.

Even worse news came from the Philadelphia Fed Survey at noon.
The headline number came in slightly higher than expected
at 11.2 but less than a revised 11.3 for December. While
this shows a slight overall expansion of manufacturing in
their district it shows that the pace of the expansion came
to a dead stop from December levels. The headline comment
was the most damaging. They said "expectations for growth
diminished notably in January". Specifically dismal was a
lack of job growth. 16% of companies surveyed expected to
reduce jobs compared to only 10% which expected to increase
hiring. The employment component fell to -6.1 for January
from -0.9 in December. The future general activity index
fell to 32.6 from 52.2 in December. This shows a marked
concern for future growth prospects. The MAPI Survey also
released today showed better trends with a positive outlook
by manufacturers. The index at 67 for the 4Q-2002 was
dramatically improved over the 59 for the 3Q-2002. The
problem is the long time frame referenced. We all know
the economy rebounded in the early 4Q of 2002 but we also
know it tripped again in December. In April this survey
will reflect the slowing conditions.

The market celebrated the Jobless claims and the CPI report
by running up to 8800 again at the open. The bulls could not
hold it and we retreated back to 8750 before news came from
Iraq that the inspectors had found 12 chemical warheads that
were not declared and were not there when they inspected in
1997. The warheads were not loaded and it remains to be seen
if this is a material event. Still the markets remained very
jittery for the rest of the day.

The worry over the warheads was offset by the "Where's Waldo,
aaa.., Saddam" rumor game. More rumors were floated that he
was still talking to a country in northern Africa about a
friendly exile. The sticking points were an agreement from
the U.S. that we would not try to prosecute him for war
crimes and civil rights violations. I doubt that will happen.
Also, a Saddam rule from afar could still be a problem in
the eyes of the U.S. Also offsetting the warhead problem
was a move by Turkey to create a Jan-23rd "Peace Summit" to
prevent a war in Iraq. There was also talk about moving the
deadline to March 27th instead of Jan-27th to allow the UN
inspectors more time to work. If you wanted uncertainty about
the coming war today was your cup of tea.

A bright spot for the morning was the earnings from GM
which were very strong at over $1 billion despite the added
incentives needed to sell those cars. These earnings were
four times the $255 million earned in the year ago period.
However, think back about that year ago period. This was
right after 9/11 and even with the rushed incentive plan
the sales were lousy.

Countering the GM news were comments from broker Raymond
James that tough times were ahead. They reported earnings
down -20% and said they expected the market recovery to
be slow and erratic and for future earnings to come in at
historically low levels. Just a bundle of good news there!

If you are a bull or a bear you got news after the bell
to fit your market bias. IBM was the leadoff hitter for
the bulls and beat the street by four cents at $1.34 for
the quarter. They did not go out of their way however to
paint a very bullish picture. The company said the current
tech spending was "stabilizing" but IBM would continue to
see pricing pressures going forward. They said the decision
timeframe for customer purchases was increasing and the
size of the deals were smaller than a year ago. The CFO
said that they were comfortable with the "current average
street consensus" for 2003. He was very specific that they
should not expect more than high single digit revenue and
earnings growth. The CFO said IBM would consider additional
dividend options in the future. The stock rose initially
from its $86 close to $87 but quickly fell to $84 as more
info became available.

SUNW also beat the street with no earnings but the street
had expected a loss of two cents. While SUNW said it was
looking forward to the future is also said the outlook
for the next six months was very cloudy and said they
would not be giving mid-quarter guidance as they had done
previously. The company claimed it was still gaining
market share in the Unix server sector. This report was
seen as positive but the cloudy outlook statements just
added to the overall confusion.

The smoking gun? No, not in Iraq but in Redmond Washington.
Microsoft came across as a snake oil salesman when it
announced earnings. First, Microsoft announced it was
going to pay a dividend of 16 cents. Great, but what were
the earnings? Then it announced is was going to split its
stock 2:1. Really surprising since they have a long history
of not splitting the stock until the $120 range. What are
they not telling us? Where are the earnings? The earnings
did beat the street at 47 cents compared to estimates of 46
cents. So far so good but here comes the problem. Microsoft
missed the revenue numbers slightly and warned for the
rest of the year. They said that 2003 earnings would be
weaker than expected due to "no material pickup in global
IT spending in the near future". Turn out the lights the
party is over. Microsoft, the biggest software monopoly
on earth, said PC sales will continue to grow in only the
low single digits. With most of that expectation backend
loaded in the 2H of 2003 that means the next two quarters
are going to be very cloudy. Sounds like the SUNW forecast.
You can translate "very cloudy" into "ugly" without a
thesaurus.

The impact was clear almost immediately. Microsoft knows
what is coming and knew the impact to their shares was
going to be drastic. They attempted to pull a rabbit out
of their hat and transform it into a Mercedes right before
our eyes but nobody was fooled. The rabbit was dead on
arrival and smelled like a rotting first half. Despite
the artificial enhancements to induce investors to buy
MSFT stock it dropped -$2 in after hours.

There are multiple problems with MSFT at this stage. The
dividend plan probably got a boost from Gates since he
will receive about $40 million for the shares he owns.
Other stockholders will benefit as well. Considering
the stock dropped -$2 in after hours they are only down
-$1.84 now and not -$2.00. I am sure that is comforting.
The stock split is the toughest part. We have taught for
years that the more a company splits its stock the harder
it is to move that stock price in the future. After the
split there will be 10.8 billion shares of MSFT stock in
circulation. Moving the stock $1 on 10.8 billion shares
requires a huge amount of buying pressure. Mutual funds
with share limits will also be forced to sell excess
shares. It makes you wonder what Microsoft really sees
up ahead if they were so willing to grasp at straws to
hold up their stock price.

AMD also announced earnings or lack thereof after the bell.
Analysts had expected a loss of -41 cents. AMD had projected
a "significantly narrower loss" than the 3Q showing of -74
cents. The actual number was significantly lower than
analysts at -68 cents. Investors did not applaud this
"significant" improvement and I doubt AMD will be doing
anything but a reverse split any time soon. AMD said
sales going forward will be flat to nominally up. Good
thing they did not say "significantly better".

The only Internet stock on a roll announced earnings
after the bell. EBAY, the worlds trading post, beat the
street with 28 cents compared to estimates of 24 cents
and exceeded revenue estimates. They tripled profits
and also raised guidance for the full year. EBAY raised
estimates to 30 cents for the 1Q compared to analyst
estimates of 25 cents and full year estimates from $1.17
to $1.27. Their holiday volume was 68% higher than the
prior year. Must be nice to own a cash cow like this one.
Remember, EBAY was started to help the founders wife
sell her PEZ collection. Really. The EBAY goal is to
reach $40 billion in auctions within three years. They
hit $14.9 billion in 2002. Want to talk stock splits?
EBAY split its stock at $75 in 1999 and 2000. EBAY was
trading at $72.50 in after hours. Does not take a rocket
scientist to figure out the future here.

Where are we going from here? Duh! IBM said annual
growth in only single digits backend loaded to the
second half. That means they "hope" there is a second
half. SUNW said "no guidance" and "very cloudy" so no
help there. AMD said, who are we kidding, who cares
what AMD said. MSFT said "no material pickup in global
IT spending in the near future" and warned their earnings
would be less than expected. EBAY is profiting because
all the unemployed workers are selling assets to eat.
Where do YOU think we are going?

The futures are down huge. The S&P futures are trading
at 911, down from their 920 4:15 close. Nasdaq futures
are down -12 already and could get worse. There is still
an additional hurdle in our immediate future. GE reports
earnings tomorrow before the bell. Bullish investors
will be looking for any light at the end of the tunnel
to hang their hopes on. If GE says something nice there
is always the chance the market could recover. However,
GE is expected to be in trouble with their power generation
systems and their multiple exposures to the airline
industry. Will they beat the street? I doubt it. More
than likely they will announce inline with the reduced
estimates and try to spin single digit growth as a good
thing. Remember, 2002 was their +17% growth year any
investor could be proud to own year. Too bad it did not
work out that way. The best thing about GE earnings is
that everyone is expecting them to be bad. That leaves
the potential for an upside surprise or maybe earnings
that are just not as bad as expected. I doubt it is
going to help regardless of what they say.

The bulls got multiple chances to grab for the gusto
this week. The Dow traded over 8800 every day for the
last six days, even closing over it once. Obviously
strong resistance even with high earnings expectations.
Now that future expectations have been shredded by all
four of the big techs I would seriously doubt we will
see 8800 again anytime soon. Support begins at 8650
and continues down to 8400 in varying degrees. Tuesday
night I said, "With every earnings report bulls will
lose another reason to buy. The short-term reasons to
buy will diminish even more with every "no recovery yet"
guidance statement." That is even truer tonight than
it was on Tuesday. The new bull market lost one leg
on Tuesday with the cautions from Intel. Scratch another
with MSFT and another with SUNW. We will call it a draw
on IBM and AMD does not count. Are you getting the picture?
The new bull market is tottering on its one remaining
leg and GE is next at bat. Even if GE manages not to
turn the bull into a piqata ready for a fall, just how
far do you think it will get on one leg? Those DJX 88.00
puts are looking really good tonight.

Enter Very Passively, Exit Very Aggressively!

Jim Brown
Editor


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

Cintas Corp. - CTAS - close: 44.74 change: -0.51 stop: *text*

Company Description:
Cintas Corporation, with revenues of $2.27 billion, headquartered
 in Cincinnati, Ohio, is the leader in the corporate identity
uniform industry providing uniforms to a wide variety of
industries nationwide. The Company also provides a wide range of
outsourcing services including entrance mats, sanitation
supplies, cleanroom services and first aid and safety products
and services. (source: company website)

Why We Like It:
As NASDAQ-100 components go, CTAS wouldn't be classified as one
of the "sexier" stocks.  Their primary source of revenue -
providing uniforms for a wide range of businesses - is decidedly
low-tech.  This helps to explain why the stock held up so well
over the past few years while the NDX.X and NASDAQ suffered huge
losses stemming from the bursting of the tech bubble.
Unfortunately for shareholders of Cintas, the company is not
immune to broader economic weakness.  Rising unemployment numbers
equate to reduced orders for uniforms as huge corporations and
smaller business slash their workforce in order to remain
profitable.  The company's CEO outlined these difficulties last
September, saying that in spite of success in adding new
customers, "...we continue to experience lower sales volume with
our existing customers as they shrink their work forces,
eliminate shifts and departments and even close operations."  The
economic situation hasn't improved much since those comments were
made.

What earned CTAS a spot on our bearish play list is the recent
breakdown out of a loosely-defined bearish wedge formation.
Shares spent nearly a month trading in an increasingly narrow
range before breaking to the downside on Wednesday.  Given the
lack of apparent news to explain this weakness, it looks like the
stock simply fell victim to a declining NASDAQ.  Today's action
saw CTAS continue to move lower before rebounding near the
December low at $44.55.  If this support level gives way we'd
expect shares to retrace the rapid gains that occurred in mid-
October and move down to the $40.00 area.  Point-and-figure
enthusiasts will notice that a trade at $44.00 would create a
triple-bottom sell signal.  While conservative traders may want
to hold off on entries until this level is violated, we're
willing to enter the play once CTAS moves under today's low
($44.50).  NASDAQ futures were moving solidly lower on Thursday
evening.  With the market looking poised to continue its decline
on Friday, we think odds are good that Cintas will soon be
trading below $44.00.  If the play is triggered our stop will be
set at $46.81, just above the exponential 200-dma.  On a final
technical note: try slapping a retracement bracket on the daily
chart, from the October lows to the October highs.  There are
some interesting correlations, including the 50% level at the
$44.50-$45.00 support region.

Annotated daily chart - CTAS:



Picked on January xxth at $xx.xx <- see text
Results since picked:      +0.00
Earnings Date:           12/19/02 (confirmed)

Chart =



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

Tide Shift
by Steven Price

The nice thing about earnings season is the abundance of opinions
that seem to take alternate form on a daily basis.  However, two
days after Intel beat earnings and Yahoo and General Motors did
the same, investor sentiment seems to be coming into focus.
Unlike the last earnings season, where seemingly bad news was
taken with a "could have been worse" buying spree, we appear to
be getting the opposite - a "that's all you've got" sell-off. So
far three major upside earnings surprises have been met with
selling.  There were certainly bearish comments about spending
over the next year that accompanied Intel's news, but anyone
paying attention to the last month's jobs data knows that the
economy is still not strong.

That brings us to this morning's initial claims report, which was
better than expected. The weekly claims number fell 32,000 to
360, 000 and the closely watched four-week average fell 19,500 to
387,500.  It is the lowest reading in six weeks and suggests
December's loss of over 100,000 jobs may be reversing itself for
a more positive January.  The moving average drop below 400,000
is also significant since that number is the gauge most
economists use for a worsening employment picture. This time of
the year can bring some quirky results and the numbers are less
reliable than they are during the rest of the year, but the news
was certainly positive.  It appears that now that we are into the
new year, some companies are getting back to the hiring that was
put off during the holidays.  That good news, on top of the
earnings surprises, was met with selling, which tells me that we
have seen a change of sentiment after the rally to start the
year.   We did get a bounce to start the day, but that bounce
found sellers once again at 8800.  Although we managed a close
above 8800 on Tuesday, the rally failed at the exponential 200-
dma the following morning and we have now set lower lows for the
last two days.  Today's close below 8700 is also significant in
that we bounced off that level intraday on Wednesday and the
bears mustered enough strength to move the bulls out of the way
on a closing basis.

With IBM and Microsoft releasing results after the bell, it is
likely we will see a big move in the morning.  How that move is
met should be the key to whether we are just taking a breather
after an unsustainable rally pace, or whether we are truly ready
to roll over, now that beginning of the year fund contributions
are out of the way. Another failed bounce could spell near-term
doom, while a big rally through the 200-dmas may signal a sigh of
relief and another leg higher.  If we do break those averages, I
would expect additional resistance at the December 2 highs.  On
December 2, the Dow traded up to 9043, which is awfully close to
the 9077 level where it failed in August.

IBM beat the street estimates by $0.04 per share, posting $1.34
per share gains. Profits were down from a year ago, when the
company earned $1.46 per share, but that was expected.  The stock
got a slight boost after hours, trading up to $87 at one point,
but cautious comments about earnings and revenue growth for the
next year eventually caught up to it and it finished the after
hours session down almost $2.  When a company like IBM says it
would not get ahead of the curve by predicting better results
than the street, and that those results are reasonable only if
the pundits predictions of IT spending growth come true,
confidence does not exactly ooze from investors' pores.

IBM also wasn't helped any by Microsoft, which first announced a
2-for-1 stock split, as well as the first dividend in its
history.  Great news, huh?  Not exactly.  Accompanying the
dividend announcement was its guidance for the next quarter and
full year 2003.  The revenue and profit targets were both below
consensus expectations for both the quarter and the year and
investors sold the stock off from its close of $55.46 to $53.60
as of the time of this writing.   Friday should give us a better
gauge as to just how investors will react to both companies'
results, but if we have seen a tide change from the recent rally,
it is unlikely that anything we heard after the closing bell will
change that.

The Semiconductor Index rolled over today ahead of the IBM
earnings, with the SOX falling through the 50-dma that had
provided support on last Wednesday's big pullback.  The Intel
capex budget numbers that accompanied its earnings surprise were
reduced from expectations of $4.0 billion to a range of $3.5-$3.9
billion.  The low end at $3.5 billion would be a 25% reduction
from the $4.7 billion it spent in 2002. That was bad news for the
semiconductor equipment makers, who continued to take the brunt
of the selling today.   Some of the big losers over the last
couple of days that got no bounce from yesterday's sell-off were
KLAC (-1.6%), TER (-4.5%), NVLS (-0.8%) and AMAT (-0.83%). After
the bell, AMD missed its earnings by a quarter and is likely to
lead a sector sell-off in the morning. With the SOX back at 315,
which was one-day resistance on January 3, the next leg down
could be a re-test of support at 300.  The 300-level has tended
to act as a magnet and traders shorting the sector may want to
tighten stops as we approach that level.

Judging by the after hours activity, we will be headed lower in
the morning.  We could easily test the January 8 low of 8580,
which represented a bounce from the 50-dma at that time.  The 50-
dma now sits at 8608 and a drop through 8580 would re-ignite talk
of the bearish head and shoulders pattern that seemed dead just a
couple of days ago. It would take a neckline break at around Dow
8200 to complete the pattern, which would have a measuring
objective of about 7500.  If, however, we get another round of
dip buying after the world's largest software company essentially
warns for 2003, then there is not much left in the business world
that can derail a rally.  Of course, part of today's drop
reflected the discovery of 11 empty chemical warheads in Iraq and
further developments toward an invasion could always pop up and
derail any rally.  For tomorrow, at least, that does not seem to
be an issue, as a rally is unlikely.
-----------------------------------------------------------------

Market Averages

DJIA ($INDU)

52-week High: 10673
52-week Low :  7197
Current     :  8697

Moving Averages:
(Simple)

 10-dma: 8729
 50-dma: 8606
200-dma: 8902

S&P 500 ($SPX)

52-week High: 1176
52-week Low :  768
Current     :  914

Moving Averages:
(Simple)

 10-dma:  921
 50-dma:  907
200-dma:  946

Nasdaq-100 ($NDX)

52-week High: 1734
52-week Low :  795
Current     : 1061

Moving Averages:
(Simple)

 10-dma: 1068
 50-dma: 1049
200-dma: 1055
-----------------------------------------------------------------

The Semiconductor Index (SOX.X):  The SOX finally gave up support
at the 50-dma, falling almost 3% to close at 315.  That level
matches the January 3 high that failed at the 50-dma on the way
up.  Following an earnings miss of $0.25 by Advanced Micro
Devices (AMD), as well as cautious comments from IBM and
Microsoft, I expect the SOX to re-test the 300 support level that
has tended to act magnetically on recent trips and could do so
again, as options expiration tends to pin optionable products at
round number strikes on expiration.  If that level is broken,
look for support in the 283-289 range.

52-week High: 657
52-week Low : 214
Current     : 315

Moving Averages:
(Simple)

 21-dma: 313
 50-dma: 323
200-dma: 366
-----------------------------------------------------------------

The VIX held support at 26, just as it appears the equity market
topped out and is beginning to roll over.  Following the
disappointing comments from IBM and lower guidance from
Microsoft, the market will likely head lower and the VIX should
be on the rise.  Readers who took last week's suggestion to
invest in straddles at the lower end of the recent volatility
range should be pleased as the VIX climbs higher.  If the sell-
off is for real, look for the VIX to head back into the 30s by
next week.

CBOE Market Volatility Index (VIX) = 27.67 -0.19
Nasdaq-100 Volatility Index  (VXN) = 44.80 +1.35
-----------------------------------------------------------------

          Put/Call Ratio  Call Volume   Put Volume

Total          0.87        715,211       621,531
Equity Only    0.70        491,234       344,093
OEX            1.13         36,892        41,777
QQQ            1.63         24,123        39,331
-----------------------------------------------------------------

Bullish Percent Data

           Current   Change   Status
NYSE          53      + 0     Bull Confirmed
NASDAQ-100    65      - 1     Bull Confirmed
Dow Indust.   60      + 3     Bull Confirmed
S&P 500       63      + 1     Bull Correction
S&P 100       61      + 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  1.13
10-Day Arms Index  1.06
21-Day Arms Index  1.31
55-Day Arms Index  1.24


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       1553          1309
NASDAQ     1404          1718

        New Highs      New Lows
NYSE        108              22
NASDAQ       78              26

        Volume (in millions)
NYSE       1,805
NASDAQ     1,543
-----------------------------------------------------------------

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




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of stock traders. The newsletter is an information service
only. The information provided herein is not to be construed
as an offer to buy or sell securities of any kind. The
newsletter picks are not to be considered a recommendation
of any stock but an information resource to aid the investor
in making an informed decision regarding trading in stocks. It
is possible at this or some subsequent date, the editors and
staff of PremierInvestor.net may own, buy or sell securities
presented. All investors should consult a qualified professional
before trading in any security. The information provided has
been obtained from sources deemed reliable but is not
guaranteed as to accuracy or completeness. PremierInvestor.net
staff makes every effort to provide timely information to its
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factors beyond our control.

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Do not duplicate or redistribute in any form.
PremierInvestor.net Newsletter                 Thursday 01-16-2003
                                                    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

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

Split Trader / Stock Splits
  Split Announcements:
                         MSFT: 2-for-1 split announcement

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: 93.05 change: +3.18 stop: 86.94

It was a pretty good day to be a biotech bull.  The stage was set
for a sector rally last night when Genentech (DNA) reported that
strong sales of its anti-cancer drugs Herceptin and Rituxan had
resulted in a sharp increase in profits on a year-over-year
basis.  The world's second-largest biotech company also said its
2003 earnings would come in better than analyst expectations.
This prompted DNA's partner, Idec Pharmaceuticals (IDPH), to
guide higher for its Q4 earnings.  IDPH said that it expected a
quarterly result of 26 cents/share, compared to the analyst
consensus of 22 cents/share. These positive news stores were just
the catalyst that the bulls needed to push BBH above resistance
at $92.00.  Our long play was activated early this morning when
the stock traded at $92.12.  Shares rocketed higher before
finally finding resistance at $94.00.  BBH finished with a 3.5%
gain after some afternoon profit-taking set it.  Looking at a
daily chart, we see that in addition to breaking through
resistance at $92.00, the stock was also able to close above the
August high at $93.00.  That bodes well for an eventual rally to
the $100 area.  Point-and-figure chartists will also notice that
a double-top buy signal was created by today's move.  This
created a bullish vertical count of $113.  For the purposes of
this play we'll be looking for a rally to the May highs near
$103.  New entries can be targeted on a move above $94.00 or a
pullback to $92.00.  Our stop is set at $86.94.  More
conservative traders may want to use a stop just below the rising
50-dma at $88.25.

Picked on January 16th at $92.12
Results since picked:      +0.93
Earnings Date                N/A

Chart =




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

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

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

Cintas Corp. - CTAS - close: 44.74 change: -0.51 stop: *text*

Company Description:
Cintas Corporation, with revenues of $2.27 billion, headquartered
 in Cincinnati, Ohio, is the leader in the corporate identity
uniform industry providing uniforms to a wide variety of
industries nationwide. The Company also provides a wide range of
outsourcing services including entrance mats, sanitation
supplies, cleanroom services and first aid and safety products
and services. (source: company website)

Why We Like It:
As NASDAQ-100 components go, CTAS wouldn't be classified as one
of the "sexier" stocks.  Their primary source of revenue -
providing uniforms for a wide range of businesses - is decidedly
low-tech.  This helps to explain why the stock held up so well
over the past few years while the NDX.X and NASDAQ suffered huge
losses stemming from the bursting of the tech bubble.
Unfortunately for shareholders of Cintas, the company is not
immune to broader economic weakness.  Rising unemployment numbers
equate to reduced orders for uniforms as huge corporations and
smaller business slash their workforce in order to remain
profitable.  The company's CEO outlined these difficulties last
September, saying that in spite of success in adding new
customers, "...we continue to experience lower sales volume with
our existing customers as they shrink their work forces,
eliminate shifts and departments and even close operations."  The
economic situation hasn't improved much since those comments were
made.

What earned CTAS a spot on our bearish play list is the recent
breakdown out of a loosely-defined bearish wedge formation.
Shares spent nearly a month trading in an increasingly narrow
range before breaking to the downside on Wednesday.  Given the
lack of apparent news to explain this weakness, it looks like the
stock simply fell victim to a declining NASDAQ.  Today's action
saw CTAS continue to move lower before rebounding near the
December low at $44.55.  If this support level gives way we'd
expect shares to retrace the rapid gains that occurred in mid-
October and move down to the $40.00 area.  Point-and-figure
enthusiasts will notice that a trade at $44.00 would create a
triple-bottom sell signal.  While conservative traders may want
to hold off on entries until this level is violated, we're
willing to enter the play once CTAS moves under today's low
($44.50).  NASDAQ futures were moving solidly lower on Thursday
evening.  With the market looking poised to continue its decline
on Friday, we think odds are good that Cintas will soon be
trading below $44.00.  If the play is triggered our stop will be
set at $46.81, just above the exponential 200-dma.  On a final
technical note: try slapping a retracement bracket on the daily
chart, from the October lows to the October highs.  There are
some interesting correlations, including the 50% level at the
$44.50-$45.00 support region.

Annotated daily chart - CTAS:



Picked on January xxth at $xx.xx <- see text
Results since picked:      +0.00
Earnings Date:           12/19/02 (confirmed)

Chart =



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

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

Boston Scientific - BSX - cls: 45.17 chg: +1.43 stop: 41.63

In the last update for BSX we noted that the while the stock had
moved below its regression channel, the previous violation of the
ascending range occurred just before a swift reversal to the
upside.  If today's trading is any indication, it looks like
history might be repeating itself.  BSX gained 3.2% today amid a
flurry of news developments.  Shares reached a relative low of
$43.12 yesterday after competitor Johnson & Johnson filed a
lawsuit against Boston Scientific related to BSX's newest
coronary stent product.  Company representatives said the suit is
"without merit."  Obviously JNJ is pulling no punches in their
attempt to capture a majority of the $2.5 billion stent market.
We'll see how this suit plays out in the courts.  The way BSX
bounced back today suggests that investors aren't too worried
about the short-term effects of these legal issues.  Shares might
also have been buoyed by news that Boston Scientific has
completed enrollment in a study for its TAXUS coronary stent.
Shares ticked sharply higher in the opening minutes and traded
near the $45.00 level for the duration of the trading day.  BSX
set a new multi-year high of $45.20 before closing just off the
best levels of the session.  This is a very encouraging
development for our long play.  With the MACD and daily
stochastics (5,3,3) curling higher, we think odds are good that
BSX will soon be testing the 1999 highs near $47.00.  New long
entries could be targeted on a move above today's high.  For the
time being our stop will remain at $41.63.  Traders seeking less
downside exposure could use a stop just under $43.00.  In after-
hours action, BSX announced that an FDA panel would review its
acid reflux treatment device.  We don't expect this news to have
a major impact on how shares trade tomorrow.

Picked on December 20th at $44.01
Results since picked:       +1.16
Earnings Date            02/04/03 (confirmed)

Chart =


---

Cigna Corp. - CI - close: 46.27 change: +0.77 stop: 42.44 *new*

So far, so good.  Shares of Cigna are doing a good job of
maintaining their relative highs, in spite of a wishy-washy
broader market.  On Thursday the stock outperformed the IUX.X
insurance index (which finished solidly in the red) and posted a
new multi-month closing high.  Although CI hasn't quite been able
to move above Tuesday's high ($46.69), this relative strength is
a sign that shares will continue to fill in the October gap.
Speaking of the IUX.X, we're a bit concerned with the fact that
the index appears to be rolling under resistance at 275.
However, we don't expect that sector weakness will pose a serious
problem as long as CI continues to outperform.  It's also
comforting to note that the IUX also has underlying support in
the 262-264 area.  CI is still playing catch-up with the rest of
the group and looks well-positioned to rally towards the next
level of psychological resistance at $50.00.  New entries can be
targeted on either move above Tuesday's high or a pullback to
$45.00.  Our stop has been raised to $42.44.  Slightly more
aggressive traders could use a stop just below the 50-dma at
$41.50.

Picked on January 14th at $45.01
Results since picked:      +1.26
Earnings Date           02/07/03 (confirmed)

Chart =


---

RJ Reynolds - RJR - close: 46.24 change: +1.15 stop: 42.98

Not a bad start for this long play.  RJR reached our entry
trigger of $45.33 on Wednesday morning when the stock spiked
higher at the opening bell.  Shares pulled back with the broader
market but were still able to close above $45.00 for the second
consecutive session.  Today's action saw RJR tag another multi-
month high before settling into fairly tight range for the rest
of the session.  What's interesting about this sideways trading
action is the fact that the Dow Jones was actually trending lower
throughout the day.  This relative strength might have resulted
from a combination of defensive buying ahead of the IBM and MSFT
earnings announcements, combined with short-covering that was
precipitated by the stock's breakout.  In any case, bulls can be
very pleased that RJR is trading at new relative highs with no
clear overhead resistance levels.  If the current uptrend remains
intact it looks like shares could reach the $50.00 area by the
end of the month.  New bullish positions can be evaluated on a
move above today's high of $46.50.  A pullback to $45.00 might
also yield an entry point if RJR sees some profit-taking on
Friday.  Bear in mind, however, that RJR announces earnings next
Thursday.

Picked on January 15th at $45.33
Results since picked:      +0.91
Earnings Date           01/23/03 (confirmed)

Chart =


---

Stryker Corp - SYK - close: 67.35 change: +0.15 stop: 66.74

With Stryker beginning to show signs of weakness, we elected on
Tuesday to challenge the stock with a tight stop at $66.74.  Thus
far the bulls have not allowed SYK to fall below $67.00.  Shares
traded in a narrow range over the past two sessions, with today's
action forming an Inside Day pattern.  Bulls can be encouraged
that SYK outperformed the Dow Jones on Wednesday and Thursday.
With the daily stochastics moving back towards the lower band, it
looks like the latest downtrend may have run its course.  On
Friday we'll be watching for SYK to hold above $67.00 and move
back towards the $68.00 area.  Given the current technical
uncertainty, we would not advise taking new entries at this time.

Picked on January 3rd at $68.26
Results since picked:     -0.91
Earnings Date          01/27/03 (confirmed)

Chart =


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

Deluxe Corp. - DLX - close: 40.43 change: +0.22 stop: 41.34

Decision-making time for short-term traders in DLX could be here
soon.  Shares bounced off the $40 level of support yesterday and
again this morning but the bounce did not see much follow-through
today.  Yesterday we lowered our stop on DLX to 41.34, just a few
cents above our entry point.  This will reduce our potential risk
should the markets rally and DLX tries to make this a double
bottom at $40.  Longer-term traders who have more faith in DLX's
weakness might be better served by keeping their stop losses
above current resistance at $42.50.  We would continue to avoid
new positions unless the stock breaks the $40 level.  $39.95,
39.90 or even $39.74 might be potential entry points to go short
should the opportunity arise.  Deluxe Corp did put out a press
release today.  The company said that their Q4 and full year
financial results will be reported on Thursday, January 30th,
2003 prior to the market open (PRNewswire - press release).

Picked on December 4th at $41.28
Results since picked:      +0.85
Earnings Date           01/30/03 (confirmed)

Chart =




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

-------------------
Split Announcements
-------------------

A 2-for-1 Stock Split and Dividend For Microsoft!

Tonight's after-hours news was dominated by earnings announcements
from tech heavyweights Sun Microsystems, IBM, and Microsoft.
Along with the expected quarterly results from MSFT (the company
beat estimates for the current quarter but issued some bearish
forward-looking comments), investors also got an unexpected
surprise: A 2-for-1 split announcement and an annual dividend of
$0.16 (on a pre-split basis).

The split will be distributed on or about February 14th to
shareholders of record on January 27th.  The annual dividend,
which is the first in the company's history, will be payable on
March 7th to shareholders of record on February 21st.  Microsoft
most recently split its stock in 1999.

MSFT finished this evening's extended trading session with a loss
of roughly 3%.  There seemed to be a lot of uncertainty related to
the quarterly numbers.  The split and dividend news seems to have
been tempered by the bearish statements for the third quarter.
Traders thinking about playing a split run need to be aware of
possible resistance near $57.50 and $59.00.

Shares closed at $55.35 on Thursday.  For a current quote, click here:

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

About the company
Founded in 1975, Microsoft is the worldwide leader in software,
services and Internet technologies for personal and business
computing. The company offers a wide range of products and
services designed to empower people through great software -- any
time, any place and on any device. (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

RYL     Ryland Group               37.91     +1.39
XTO     XTO Energy                 24.92     +0.63
JAS.A   Jo-Ann Stores              26.55     +1.05

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

CURE    Curative Health Services   17.75     +1.02
OSIS    OSI Systems                18.79     +1.25
FCX     Freeport McMoran           18.33     +1.33
OSTK    Overstock.com              17.19     +1.14

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

SYMC    Symantec Corp              47.65     +1.60
IDPH    Idec Pharmaceuticals       36.09     +2.67
UTX     United Technologies        66.21     +1.81
BVF     Biovail Corp               31.79     +1.84
TRBS    Texas Regional Bancshares  37.31     +1.16
S       Sears Roebuck              28.53     +1.83
DNA     Genentech Inc              39.21     +4.00
KMI     Kinder Morgan              44.86     +1.76
ICUI    ICU Medical                37.49     +1.91

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

FRX     Forest Labs                53.43     -1.22
STJ     Saint Jude Medical         40.60     -1.07
DJ      Dow Jones & Co             43.10     -1.58
QLGC    QLogic Corp                38.10     -3.73
NUE     Nucor Corp                 42.59     -2.04
AGE     A.G. Edwards               32.19     -1.06
ELX     Emulex Corp                21.51     -1.99

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

KPP     Kaneb Pipeline             36.21     -0.23
GSK     Glaxosmithkline            38.70     -0.51
BRO     Brown & Brown              32.17     -1.48



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This newsletter is a publication dedicated to the education
of stock traders. The newsletter is an information service
only. The information provided herein is not to be construed
as an offer to buy or sell securities of any kind. The
newsletter picks are not to be considered a recommendation
of any stock but an information resource to aid the investor
in making an informed decision regarding trading in stocks. It
is possible at this or some subsequent date, the editors and
staff of PremierInvestor.net may own, buy or sell securities
presented. All investors should consult a qualified professional
before trading in any security. The information provided has
been obtained from sources deemed reliable but is not
guaranteed as to accuracy or completeness. PremierInvestor.net
staff makes every effort to provide timely information to its
subscribers but cannot guarantee specific delivery times due to
factors beyond our control.

Please read our disclaimer at:
http://www.optioninvestor.com/page/oin/aboutus/disclaimer.html

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Do not duplicate or redistribute in any form.

DISCLAIMER

Option Investor Inc is neither a registered Investment Advisor nor a Broker/Dealer. Readers are advised that all information is issued solely for informational purposes and is not to be construed as an offer to sell or the solicitation of an offer to buy, nor is it to be construed as a recommendation to buy, hold or sell (short or otherwise) any security. All opinions, analyses and information included herein are based on sources believed to be reliable and written in good faith, but no representation or warranty of any kind, expressed or implied, is made including but not limited to any representation or warranty concerning accuracy, completeness, correctness, timeliness or appropriateness. In addition, we do not necessarily update such opinions, analysis or information. Owners, employees and writers may have long or short positions in the securities that are discussed.

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