Option Investor
Newsletter

Daily Newsletter, Thursday, 02/06/2003

HAVING TROUBLE PRINTING?
Printer friendly version
PremierInvestor.net Newsletter                 Thursday 02-06-2003
                                                    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:      Fear Returns To the Market
Play-of-the-Day:  Industrial-strength Bearishness
Market Sentiment: Finally Got It...Sort of


************************************************************
MARKET WRAP  (view in courier font for table alignment)
************************************************************
      02-06-2003           High     Low     Volume   Adv/Dcl
DJIA     7929.30 - 55.90  7991.96  7881.30 1.69 bln 1155/2059
NASDAQ   1301.73 +  0.23  1310.51  1291.47 1.22 bln 1323/1891
S&P 100   423.49 -  2.52   426.01   420.38   Totals 2478/3950
S&P 500   838.15 -  5.44   844.23   833.25
W5000    7958.18 - 51.90  8017.95  7921.33
RUS 2000  364.74 -  2.25   368.15   363.86
DJ TRANS 2180.69 + 24.30  2195.97  2156.89
VIX        38.42 +  1.58    39.64    37.28
VXN        48.62 +  0.11    49.67    45.05
Total Volume 3,164B
Total UpVol  1,173B
Total DnVol  1.935M
52wk Highs  117
52wk Lows   241
TRIN       1.44
PUT/CALL   1.35
*************************************************************

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

Fear Returns to the Market

The VIX is returning to 40 and the Put/Call ratio closed
the day at 1.35. The President held a press conference
and said time had run out for Iraq. Pressure is building
for action in Iraq and that same pressure is threatening
current support levels in the markets.

Dow Chart - Daily


Nasdaq Chart - Daily


The morning started with bad news from Jobless Claims again.
The headline number was 391,000 and again very close to the
critical 400,000 level. The bad news was a revision of last
weeks number to 402,000, up from 397,000. Anything above
350,000 represents a declining job market. Considering the
+42% increase in announced layoffs in January the Jobless
Claims numbers should continue to grow.

With jobless claims hovering near 400,000 the Jobs Report
on Friday could have a negative surprise again. Last month
the expectations were for a gain of +37,000 jobs and the
actual number came in with a loss of -101,000. A serious
deficit. This month analysts are expecting a gain of +60,000.
This sets up a real potential for another negative event.

Also surprising traders was a drop in Productivity, the
hallmark of the recovery according to Greenspan, by -0.2%
and well under expectations. Unit labor costs also soared
+4.8%. This was the final number for the fourth quarter
and shows that the economic weakness in the closing days
of 2004 was weaker than originally thought. This shows the
weaker production load from slowing orders. Capacity is
there but demand is absent. Companies are continuing to
cut excess workers but minimums are required to keep
production lines open. Tough times still exist in the
manufacturing sector.

Chain Store sales for the full month of January rose slightly
by +1.8% but department stores dropped -3.9%. Drug stores
rose the most with +5.8% gains. Unfortunately there are
a lot more items and economic dollar volume in department
stores and they have a greater impact on the economy. Despite
the weak sales WMT, JCP and GPS raised earnings guidance
with Sears lowering guidance due to credit card defaults.

Echoing the Cisco comments earlier in the week Dell's COO
used the Iraq ate our orders excuse and said technology
spending would be weak this year due to Iraq and the
economy. He said the economy more than anything else was
weighing on spending and the war just made more people
skittish. He said 2003 would be a difficult year. That
did not depress the Nasdaq futures for more than a few
minutes but then what did he say that everyone did not
already know?

EDS warned after the close that revenue and earnings would
suffer for 2003 and reported a -11% drop in revenue for the
4Q. The CFO said they were taking a very guarded view for
2003. He said that even without extended military action
against Iraq, overall market conditions are not expected
to recover through the first half. They cut Q1 expectations
to 30-35 cents and well below analyst's estimates of 43
cents.

Returning to center stage was North Korea with warnings
that the US is not the only country that could make
preemptive attacks. They warned that any threats against
North Korea would be taken as acts of war and could prompt
a devastating preemptive attack by North Korea. Even though
NK is a "pauper" tiger it is a tiger with claws and it is
holding South Korea hostage. Their method of negotiating
is to talk a big bluff and attempt to attract a bribe
to back off the threats. The US is not worried specifically
about any material threat from NK against the US but they
also cannot let the threat stand. The US sent the carrier
battle group Carl Vincent to station 200 miles offshore
from NK. The carrier group is carrying a large contingent
of attack and reconnaissance aircraft. Some fear this
escalation of force in the eyes of NK could ratchet up
their threats as well. What a wonderful world!

The US government also issued another terrorist alert and
warned that an increased level of communication intercepts
were pointing to the possibility of multiple terrorist
attacks over the next three weeks. The said the attacks
could be timed to the end of the Muslim holy days after
Feb-12th and the possible start of an Iraq war. They think
attacks are necessary to show they are bringing the war
to us instead of just waiting for us to bomb Iraq. Owning
a house in the country is looking more attractive every
day.

Last month was the first January since the 1990 that had a
net redemption from stock funds. This is normally a heavy
inflow month as holiday bonuses and retirement contributions
pour into retirement accounts. Investors are worried that
there is still trouble in our future and they are moving
dollars to bond funds and money markets despite the very
low yields. Overseas investors are pulling money out due
to the falling dollar and anti-American war sentiment.
This pushed the Put/Call ratio to a high close at 1.35,
which shows growing fear in the marketplace.

The Dow hit another milestone today with its break below
7900. The first dip was quickly met with bargain hunting
buyers but they were unable to get close to the 8000 level
again. After the initial bounce there was a series of
repeated attempts to recover but each met resistance at
a lower level and eventually traders gave up. The index
dropped below 7900 again just before the close but managed
to recover slightly on short covering.

The Nasdaq was probably the only reason we are not at 7700
tonight. It stubbornly refused to give up the 1300 level
and finished with a fractionally positive close. The 1295
level is proving to be strong support but the Dell and EDS
comments after the bell today could spell an end to this
stronghold.

It is amazing to me that with the North Korea threat, the
terrorist alert and the tech profit warnings that the
S&P and NDX futures are positive at 7:30PM. Add to that
the very real possibility that the Jobs Report will be
negative again and I think a lot of traders must be on
drugs and I am not talking about Viagra. I can only guess
at the monster spike we would see if Saddam decided to
retire to Libya. If that happens I am backing up the truck.
Until then I am still concerned that there is more risk to
the downside ahead of us. The Dow tested a very critical
level today of 7907 which is the 61.8% retracement level
from the October low to the December high. A failure of
this level should be followed by a retest of the 78%
retrace at 7592 and likely very soon. That 1300 level
on the Nasdaq is also critical. Should that level
fail there is only two real speed bumps at 1266 and
1196 before retesting the October lows near 1100.

This market, despite the recent support at the current
levels, is very fragile. If we had a single terrorist
event on US soil or shots fired in North Korea we could
be in free fall in a heartbeat. Everyone is primed to
buy but they are waiting on the sidelines for the signal
once the war starts. Until then the negative event risk
is huge. Short of retirement by Saddam we should be headed
lower.

Enter Very Passively, Exit Very Aggressively!

Jim Brown
Editor


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

Grainger Inc. - GWW - close: 46.00 change: -0.63 stop: *text*

Company Description:
W.W. Grainger, Inc, with 2001 sales of $4.8 billion, is the
leading North American industrial distributor of products used by
businesses to maintain, repair, and operate their facilities.
(source: company website)

Why We Like It:
Is the U.S. economy headed for a double-dip recession?  That
depends on who you ask.  Both the bulls and bears have plenty of
credible arguments to support their market bias.  The most recent
economic data, however, hasn't given the bovines much to cheer
about.  On Thursday morning the government reported that non-farm
productivity fell by 0.2% in the fourth-quarter, to its lowest
level since early 2001.  Analysts were expecting a gain of half a
percentage point.  While it's hard to read too much into one
number, that certainly isn't a positive sign for the
manufacturing sector and the economy as a whole.  Throw the
never-ending war concerns into the equation, and it's easy to see
why the Dow Jones slipped to a new multi-month low on Thursday.
This is a technically significant breakdown because the index
does not have any noteworthy support until the October lows near
7250.  The psychologically important 7500 level presents a more
realistic short-term bearish objective.

Shares of Grainger, which have direct exposure to the
manufacturing group, have been declining with the Industrials.
The stock underperformed the major indexes today and came within
just five cents of violating the relative low of $45.60.  And
much like the Dow, GWW is trading well above its next level of
clear support.  We're looking for shares to retrace the steep
mid-October gains and move towards $40.00.  A possible fly in the
ointment is the $44.00 level, which acted as resistance in
September.  This area is also just above bullish support on the
point-and-figure chart.  We believe that shares will fall below
$44.00 if the Dow continues towards 7500.  On another technical
note, bears can be pleased with the reversal in the daily
stochastics (5,3,3).  This reversal stemmed from GWW's recent
rollover near $48.00.  In order to confirm downside momentum
we'll use an entry trigger at $45.59.  Our stop-loss will be
placed at $48.06, slightly above the relative highs.  Those
looking for less upside risk could use a stop slightly above
yesterday's high of $47.25.

Annotated daily chart - GWW:



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





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

Finally Got It...Sort of
by Steve Price

We just about got our range breakout.  Just about.  In fact, we
got enough of a rollover to do some real technical damage, but
once again found bids on the downside that left us back between
the lines. I have highlighted the recent ranges in the Dow (7900-
8150), SPX (840-865) and OEX (424-438) in the last couple of
columns.  Those ranges had held strong for the last eight
sessions.  That changed this morning, with those broader indices
giving their almost daily point and figure reversals, this time
back into a bearish column of "O."  Maybe more importantly, they
all reversed lower far enough to give triple bottom point and
figure sell signals beneath those recent support levels.

In the past week, each reversal has been an indicator to take
contrarian action.  Buying the reversals down and selling the
reversals up would have turned out some nice profits for traders
willing to step up and buy support and sell resistance.  However,
this morning was different in the sense that we actually got the
triple bottom sell signal (actually a quad bottom, but that is
not actually an official designation).   We did attempt a rebound
with an intraday bounce, but that bounce failed at a much lower
level than we have seen over the past week, adding to bearish
sentiment with a lower high.   By the end of the day, we once
again took out the morning lows before catching another bounce.

One possibility that we need to be aware of is the bear trap.  A
bear trap is a one-box violation of the triple bottom that turns
back up immediately into a big rally.  An additional downside bow
is generally regarded as a move beyond the bear trap, reducing
the chances of a big bounce.  The SPX gave us that second box,
while the Dow and OEX have yet to do so.   Still, the support
levels that have held us for the past eight sessions finally gave
way and things look anything but bullish.  In fact, the last
rally created a triple-bottom in the OEX that had previously been
a double bottom on the last support test.  That triple bottom in
all three increases the bearish probabilities, giving all three
indices similar risk profiles.

The fly in the ointment in all of this bearishness is the Nasdaq
Composite.  In spite of what seems like a broad market sell-off,
the COMP continues to hold support on a closing basis at 1300.
It closed today at 1301.73, its third straight day of recovering
from sub-1300 moves to close above that support.   This pattern
of recovery actually looks similar to what it did 20 points
higher, when it was testing its November pullback low at 1319,
following what appears to be the left shoulder of a bearish head
and shoulders formation.  The last few days of January found the
COMP testing that 1319 support for six straight days before
finally giving in and dropping down to 1300.   Essentially, we
are still seeing a ratcheting down, but until the techs drop, it
will be tough to get the big market-wide sell-off from these
levels after already dropping hard the last two weeks of January.

Another contrarian indicator that has been stretched and is once
again flirting with resistance is the Market Volatility Index
(VIX), which measures implied volatility levels of at the money
options in the OEX.  The indicator generally rallies on market
drops and falls on market rallies or slowdowns and is reflective
of the level of fear in the marketplace. .  After consolidating
for the last several days, the VIX had fallen from a test of 40
on the previous market drop, all the way below 35, which was its
previous resistance level on the market drops in November and
December.  That 35 level had acted as brief support over the last
week and a half, finally giving in on February 3.  Now that we
are back above that level (closing today at 38.52), we are seeing
resistance again at 40, with a high today of 39.64.   Those
traders using this measure as a contrarian indicator will view
its approach to resistance as bullish indicating it's time for a
bounce.  However, it seems a more likely scenario, following
today's technical breakdowns, would be a move above 40 indicating
more room for equities to fall.  The current point and figure
bearish vertical count on the Dow is 7600, but that is derived
from the current column of "O" and could go lower.  In any case,
the fulfillment of that objective would approach the July lows,
when the VIX traded up to 56.74 at its peak.  If we do continue
to get a breakdown in the broader markets, traders can watch for
the VIX to stretch back into the 50s as we approach either the
July or October lows in the broader markets.  At those points, we
will be at recent market extremes and it may be time for shorts
to tighten up the stops and be ready to take profits on a
reversal.

We are certainly still in a high-risk environment when any
development on the global front can lead to big intraday
reversals.  Part of the reason for today's drop could have been
North Korea's statements that any pre-emptive action by the U.S.
against its nuclear facilities would lead to full-scale war,
which came one day after the country announced it was restarting
its nuclear power plant in Yongbyon.  Any development the market
views as favorable out of North Korea or Iraq could certainly
turns us around in a hurry.  The opposite is also true.  I still
believe traders should be playing with risk capital only in the
current environment and until the geo-political environment
stabilizes that will continue to be the case.
-----------------------------------------------------------------

Market Averages

DJIA ($INDU)

52-week High: 10673
52-week Low :  7197
Current     :  7929

Moving Averages:
(Simple)

 10-dma: 8035
 50-dma: 8488
200-dma: 8759

S&P 500 ($SPX)

52-week High: 1176
52-week Low :  768
Current     :  838

Moving Averages:
(Simple)

 10-dma:  852
 50-dma:  896
200-dma:  928

Nasdaq-100 ($NDX)

52-week High: 1734
52-week Low :  795
Current     :  970

Moving Averages:
(Simple)

 10-dma:  986
 50-dma: 1035
200-dma: 1029
-----------------------------------------------------------------

Market Volatility

As I mentioned above, we are back above 35% and testing 40% again
to the upside.  A close over 40 would be a signal that
institutions are in a premium buying mode, as opposed to selling
resistance.  That would tell me the big boys see more downside
and since their book is a lot bigger than mine, I'll go along for
the ride when that happens. Those straddles are getting more
expensive, and the daily time decay is getting more expensive.
However, if we head lower, the decay will more than be made up
for by the movement and the implied volatility increase.  If the
opposite happens and we stabilize, or head higher, straddle
owners should not be so worried about hitting bids and closing
out, as they will quickly melt in a rebounding market.

CBOE Market Volatility Index (VIX) = 38.52 +1.68
Nasdaq-100 Volatility Index  (VXN) = 48.62 +0.11
-----------------------------------------------------------------

The Retail Index (RLX.X):  The retailers got a boost to start the
day as Wal-Mart guided higher for the full year 2003.  That
raised guidance was mirrored by JCP, ANN, PSUN, TLB, SHRP and
STGS.  On the flip side was disappointing same-store sales for
the month of January that came in below expectations for many
retailers, including Wal-Mart.  Sears not only saw a greater than
expected same-store sales decline, but also warned on earnings
for the first quarter.  Sears fell $2.23 on the day.   When all
was said and done, the RLX couldn't fight the sinking market tide
and continued its downward trend, losing just under a point on
the day.   We are just under the 250 support level and not far
from the October intraday low just under 245.  Until we see a
trend reversal in the index, traders should be careful about
picking longs in the sector.

52-week High: n/a
52-week Low : 244
Current     249

Moving Averages:
(Simple)

 21-dma: 259
 50-dma: 269
200-dma: 295
-----------------------------------------------------------------

          Put/Call Ratio  Call Volume   Put Volume

Total          1.35        468,524       632,174
Equity Only    1.27        354,623       445,709
OEX            1.37         25,580        35,117
QQQ            1.79         14,455        25,908
-----------------------------------------------------------------

Bullish Percent Data

           Current   Change   Status
NYSE          44.3    - 1     Bull Correction
NASDAQ-100    43.0    - 1     Bear Confirmed
Dow Indust.   26.7    - 0     Bear Confirmed
S&P 500       43.4    - 1     Bull Correction
S&P 100       40.0    - 1     Bear 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  1.47
10-Day Arms Index  1.49
21-Day Arms Index  1.39
55-Day Arms Index  1.33


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        989          1863
NASDAQ     1249          1805

        New Highs      New Lows
NYSE        59               93
NASDAQ      48               85

        Volume (in millions)
NYSE       1,656
NASDAQ     1,195
-----------------------------------------------------------------

Commitments Of Traders Report: 01/28/02

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 and short positions, ending up with a
net short increase of 4,500 contracts.  Small traders took the
opposite approach, reducing both positions, but ending up with a
net increase of 4,300 long contracts.

Commercials   Long      Short      Net     % Of OI
01/07/03      411,542   455,538   (43,996)   (5.1%)
01/14/03      411,052   453,164   (42,112)   (4.9%)
01/21/03      415,028   456,885   (41,857)   (4.8%)
01/28/03      422,232   468,586   (46,354)   (5.2%)

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
01/07/03      143,169    83,895    59,274     26.1%
01/14/03      144,182    92,358    51,824     21.9%
01/23/03      148,227    95,356    52,871     21.7%
01/28/03      142,734    85,567    57,167     25.0%

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 virtually unchanged, with a net
reduction of 1,300 short contracts.  Small traders Small traders
 left the long side unchanged, while reducing shorts by 800
 contracts.

Commercials   Long      Short      Net     % of OI
01/07/03       37,966     48,156   (10,190) (11.8%)
01/14/03       38,057     45,060   ( 7,003) ( 8.4%)
01/23/03       37,174     49,789   (12,615) (14.5%)
01/28/03       37,955     49,321   (11,366) (13.0%)

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
01/07/03       19,708     8,453    11,255    40.1%
01/14/03       20,757     8,320    12,437    42.8%
01/23/03       25,852     6,764    19,088    58.5%
01/28/03       25,814     7,576    18,238    54.6%

Most bearish reading of the year: (10,769) - 06/11/02
Most bullish reading of the year:  19,088  - 01/21/02

DOW JONES INDUSTRIAL

Commercials reduced the overall long position by 1,400 contracts,
while small traders reduced the net short by 200 contracts.

Commercials   Long      Short      Net     % of OI
01/07/03       16,210    11,333    4,877      17.7%
01/14/03       17,804    12,427    5,377      17.8%
01/23/03       16,901    11,031    5,870      21.0%
01/28/03       16,013    11,574    4,439      16.1%

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
01/07/03        4,963     8,334    (3,371)   (25.4%)
01/14/03        4,552     7,697    (3,145)   (25.7%)
01/23/03        5,120     8,282    (3,162)   (23.6%)
01/28/03        4,838     7,836    (2,998)   (23.7%)

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




=================================================================
To stop receiving this PremierInvestor.net Newsletter,
send email to Contact Support
=================================================================
DISCLAIMER
=================================================================

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

*****************************************************************
ADVERTISING INFORMATION

For more information on advertising in PremierInvestor.net
Newsletter, or any Premier Investor Network newsletter please
contact Contact Support.

*****************************************************************

Copyright ) 2003 PremierInvestor.net. and
The Premier Investor Network.
Do not duplicate or redistribute in any form
PremierInvestor.net Newsletter                 Thursday 02-06-2003
                                                    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:  EBAY
  Bearish Play Updates:  CCMP

Stock Bottom / Active Trader
  New Bearish Plays:     GWW
  Bearish Play Updates:  APD, JWN

High Risk/Reward
  Bullish Play Updates:  CYTC
  Bearish Play Updates:  IDPH

Split Trader / Stock Splits
  Split Announcements:
                         EXPE: 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
  --------------------

eBay Inc. - EBAY - close: 73.15 change: -0.38 stop: *text*

Much like the NASDAQ, EBAY traded with no clear direction on
Thursday.  We've collared this play with two different entry
strategies, but thus far the stock hasn't broken out of the $72-
$75 range.  Yesterday a mid-session rally took EBAY to a high of
$74.63.  Shares have since been marching steadily lower without
breaking down towards the rising 50-dma at $71.09.  On Tuesday we
set an alternate plan of action to enter this play on a rebound
from that moving average: "If EBAY falls below $71.00 our
secondary trigger will be placed at $71.26.  If shares bounce
from the 50-dma and move above $71.25, we'll activate the long
play with a stop at $69.94.  Our objective for will be to ride
EBAY back to the $75-$76 area."  We're keeping that plan in
place, as well as our original upside trigger at $75.51.  More
sideways trading might prompt us to drop the un-triggered play
and turn our attention to stocks that are seeing more movement.

Picked on February xth at $xx.xx <- see text
Results since picked:      +0.00
Earnings Date           01/16/03 (confirmed)




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

Cabot Micro. - CCMP - cls: 43.14 chg: -0.43 stop: 45.51 *new*

Talk about indecision!  The NASDAQ traded in a narrow 19-point
range on Thursday before finishing basically unchanged.  The
SOX.X (semiconductor index) didn't fare so well with its 1.4%
decline. While this move didn't produce any significant technical
damage, it does look like support at 260 might soon be tested.  A
violation of this level could send the index tumbling another 20
points to the 240 area.  That could be just the catalyst we need
for a breakdown in Cabot.  The stock managed to rally with the
NASDAQ on Wednesday but was turned back below the 200-dma.
Today's action saw CCMP follow the SOX.X into negative territory
while remaining well above the relative low of $42.57.  Traders
looking for new entries can continue to watch for a move under
that level.  Other than psychological support at $40.00, we see
no major obstacles for the bears until the $33-$35 region.  At
this point we're going to lower our stop-loss to $45.51, ten
cents above the 200-dma.  Longer-term traders may want to
maintain a stop above the 100-dma at $46.83.

Picked on January 31st at $43.70
Results since picked:      +0.56
Earnings Date           01/23/03 (confirmed)






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

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

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

Grainger Inc. - GWW - close: 46.00 change: -0.63 stop: *text*

Company Description:
W.W. Grainger, Inc, with 2001 sales of $4.8 billion, is the
leading North American industrial distributor of products used by
businesses to maintain, repair, and operate their facilities.
(source: company website)

Why We Like It:
Is the U.S. economy headed for a double-dip recession?  That
depends on who you ask.  Both the bulls and bears have plenty of
credible arguments to support their market bias.  The most recent
economic data, however, hasn't given the bovines much to cheer
about.  On Thursday morning the government reported that non-farm
productivity fell by 0.2% in the fourth-quarter, to its lowest
level since early 2001.  Analysts were expecting a gain of half a
percentage point.  While it's hard to read too much into one
number, that certainly isn't a positive sign for the
manufacturing sector and the economy as a whole.  Throw the
never-ending war concerns into the equation, and it's easy to see
why the Dow Jones slipped to a new multi-month low on Thursday.
This is a technically significant breakdown because the index
does not have any noteworthy support until the October lows near
7250.  The psychologically important 7500 level presents a more
realistic short-term bearish objective.

Shares of Grainger, which have direct exposure to the
manufacturing group, have been declining with the Industrials.
The stock underperformed the major indexes today and came within
just five cents of violating the relative low of $45.60.  And
much like the Dow, GWW is trading well above its next level of
clear support.  We're looking for shares to retrace the steep
mid-October gains and move towards $40.00.  A possible fly in the
ointment is the $44.00 level, which acted as resistance in
September.  This area is also just above bullish support on the
point-and-figure chart.  We believe that shares will fall below
$44.00 if the Dow continues towards 7500.  On another technical
note, bears can be pleased with the reversal in the daily
stochastics (5,3,3).  This reversal stemmed from GWW's recent
rollover near $48.00.  In order to confirm downside momentum
we'll use an entry trigger at $45.59.  Our stop-loss will be
placed at $48.06, slightly above the relative highs.  Those
looking for less upside risk could use a stop slightly above
yesterday's high of $47.25.

Annotated daily chart - GWW:



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





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

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

Air Products - APD - close: 41.24 change: -0.09 stop: 42.51

APD's rebound from the $40.00 level has petered out below the
descending 21-dma at $41.97.  Flip between a 5-minute chart of
the Dow Jones and Air Products, and you'll see a pretty close
correlation.  The stock hasn't been able to find any buyers in
the face of a steady broader market decline.  The daily
stochastics (5,3,3), which are reversing from the upper band,
suggest that APD could be headed for another downward leg.
Looking at a chart of the same interval, we see that APD has
more-or-less been trading sideways over the past four sessions.
The Dow, meanwhile, has lost more than 200 points over the same
time period.  If this pattern of relative strength continues on
Friday we may challenge APD with a tight stop-loss just above the
21-dma.  Conservative traders may want to take that step now.

Picked on January 29th at $39.84
Results since picked:      -1.40
Earnings Date           01/22/03 (confirmed)




---

Nordstrom Inc - JWN - cls: 17.34 chg: -0.21 stop: 18.12 *new*

Last night Nordstrom gave investors some insight into how
business is doing.  The company said that its same-store sales
rose 0.8% in January.  Wall Street, however, had been expecting a
growth rate of 1.4%.  That lackluster improvement was seen in
many of the other large retailers that reported January sales
this morning.  Investors reacted to Nordstrom's disappointing
sales data by taking JWN down to a fresh relative low of $17.28.
This move also triggered a double-bottom sell signal on the
point-and-figure chart.  Shares finished with a 1.1% loss and
underperformed the RLX.X retail index, which posted a fractional
loss.  These are encouraging signs for bearish traders.  JWN has
been moving steadily lower ever since it gave up support at
$18.00 earlier this week.  With no clear levels of additional
underlying support, we'll continue to target a move to the
$15.50-$16.00 region.  What we'll be looking for on Friday is for
shares to fill in the remainder of the small October 11th gap and
move below $17.00.  Short-term traders could think about taking
profits on a bounce from that level.  New entries at this point
are probably best left to aggressive traders, who could watch for
another failed rally near $17.50.  Also note that we've lowered
our stop to $18.12, one cent above Tuesday's high.

Picked on January 27th at $17.98
Results since picked:      +0.64
Earnings Date           02/20/02 (confirmed)






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

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

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

Cytyc Corp. - CYTC - close: 11.75 change: -0.05 stop: *text*

A general lack of direction in the NASDAQ had most four-lettered
stocks moving in a narrow range on Thursday.  Such was the case
with CYTC.  Shares spiked higher during the first minutes of
trading but did not reach our entry trigger at $12.11.  Shares
drifted slowly lower throughout the session before finishing with
a small loss.  For the time being we'll maintain our action
point; the bulls could really pour it on once resistance gives
way.  But remember, this is an aggressive play.  We're fighting
the market trend and the NASDAQ has had a tough time maintaining
its intraday gains.  You may want to take only partial positions
in CYTC until the Composite shows signs of firming up.  If the
play is triggered we'll set our stop at $11.20.

Picked on February 5th at $xx.xx <- see text
Results since picked:      +0.00
Earnings Date           01/28/03 (confirmed)




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

IDEC Pharma. - IDPH - close: 30.71 change: -0.27 stop: *text*

The bulls are doing their best to keep IDPH above support at
$30.00.  On Wednesday the stock fell to a low of $30.02 - missing
our entry trigger by only three cents.  Shares rebounded with the
NASDAQ in afternoon trading before pulling back to close just
below $31.00.  Today's action was more subdued, as shares traded
an Inside Day on the second-lightest volume of the year.  While
it's hard to garner much technical insight from such a non-
eventual session, it's interesting to see that shares
underperformed the BTK.X biotech index, which finished slightly
in the green.  That relative weakness leads us to believe that
IDPH could suffer some heavy selling if it breaks out of the
Inside Day formation and moves below $30.00.  Our action point
remains at $29.99, with a stop (if the play is triggered) at
$32.82.

Picked on February xth at $xx.xx
Results since picked:      +0.00
Earnings Date           01/30/03 (confirmed)






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

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

Expedia Inc. Authorizes 2-for-1 Split

Expedia Inc. the online travel service competing for your dollars
with the likes of Travelocity, CheapTickets.com, and
Priceline.com, came out with very strong Q4 earnings numbers on
Wednesday evening.  Gross quarterly bookings were up 96% year over
year to $1.38 billion while net revenues were up 100%

In addition to the earnings report EXPE also announced a $200
million stock buy back and the approval of a two-for-one stock
split.

The shareholder record date for the stock split will be February
24th, 2003.  Look for the ex-dividend date to be on or about March
10th, 2003.  This looks like the first stock split for shares of
EXPE.

EXPE closed at $59.05 on Wednesday prior to the news and opened at
$61.38 on Thursday's session while closing for a 7.29% gain at
$63.36.

For a current quote, click here:
http://user.financialcontent.com/pin1/quote.cgi?account=pin1&ticker=EXPE

About the company
Expedia, Inc. is the world's leading online travel service and the
eighth largest travel agency in the U.S. Expedia's award-winning
Expert Searching and Pricing (ESP) technology delivers the most
comprehensive flight options available online. ESP also allows
customers to dynamically build complete trips that combine
flights, Expedia Special Rate hotels and other lodging, ground
transportation, and destination activities. Expedia operates
Classic Custom Vacations, a leading wholesaler of premiere
vacation packages to destinations such as Hawaii, Mexico, Europe
and the Caribbean; and Metropolitan Travel, a corporate travel
agency. Travelscape, Inc., wholly owned by Expedia, also operates
as WWTE, a private-label online travel business that supplies car
and hotel inventory to third parties. Expedia is a majority-owned
subsidiary of USA Interactive (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

OLOG    Offshore Logistics         21.27     +0.63

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

ANN     Ann Taylor Stores         19.53     +1.41
ITRI    Itron Inc                 17.57     +1.46
URS     URS Corp                  11.30     +1.15

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

USAI    USA Interactive            23.21     +1.87
MUR     Murphy Oil                 43.76     +1.13
EXPE    Expedia Inc                63.36     +5.21
VLO     Valero Energy              37.92     +1.17

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

S       Sears Roebuck              23.31     -2.23
BRL     Barr Labs                  73.55     -2.81
BZH     Beazer Homes               55.08     -2.02
BARZ    Barra Inc                  27.84     -1.05
CB      Chubb Corp                 49.89     -1.47
HOTT    Hot Topic                  22.09     -1.44
DEO     Diageo                     39.55     -1.47
RDN     Radian Group               34.49     -1.41

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

CTMI    CTI Molecular Imaging      23.01     -2.73
APU     AmeriGas Partners          24.03     -0.78




=================================================================
To stop receiving this PremierInvestor.net Newsletter,
send email to Contact Support
=================================================================
DISCLAIMER
=================================================================

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

*****************************************************************
ADVERTISING INFORMATION

For more information on advertising in PremierInvestor.net
Newsletter, or any Premier Investor Network newsletter please
contact Contact Support.

*****************************************************************

Copyright ) 2003  PremierInvestor.net. and
The Premier Investor Network.
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.

Readers are urged to consult with their own independent financial advisors with respect to any investment. All information contained in this report and website should be independently verified.

To ensure you continue to receive email from Option Investor please add "support@optioninvestor.com"

Option Investor Inc
PO Box 630350
Littleton, CO 80163

E-Mail Format Newsletter Archives