Option Investor
Newsletter

Daily Newsletter, Thursday, 02/13/2003

HAVING TROUBLE PRINTING?
Printer friendly version
PremierInvestor.net Newsletter                 Thursday 02-13-2003
                                                    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:      A Miracle Recovery
Play-of-the-Day:  About To Get Flushed?
Market Sentiment: What the Blix Was That?


************************************************************
MARKET WRAP  (view in courier font for table alignment)
************************************************************
      02-13-2003           High     Low     Volume   Adv/Dcl
DJIA     7749.87 -  8.30  7781.89  7628.99 1.76 bln 1309/1925
NASDAQ   1277.44 -  1.50  1281.32  1261.79 1.31 bln 1325/1951
S&P 100   414.04 +  0.43   416.13   407.79   Totals 2634/3876
S&P 500   817.37 -  1.31   821.25   806.29
W5000    7752.06 - 20.30  7780.44  7657.63
RUS 2000  354.77 -  0.61   355.40   351.78
DJ TRANS 2073.48 - 27.20  2106.08  2054.59
VIX        38.45 -  0.65    40.68    37.73
VXN        50.97 +  3.54    52.23    49.94
Total Volume 3,287B
Total UpVol  1,197B
Total DnVol  1,936M
52wk Highs   91
52wk Lows   457
TRIN       1.34
PUT/CALL   1.18
*************************************************************

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

A Miracle Recovery

What may have seemed a miracle to some was actually a freak
combination of circumstances. The Dow pulled back from a -130
drop to 7628 on a combination of rumors, reporting errors and
a repeat of old news. The sparks from the news found explosive
tender from extreme oversold conditions.

Dow Chart - 240 min


Nasdaq Chart - 120 min


The most watched economic report for today, Jobless Claims,
showed a slight decrease for the current week to 377,000 but
last week was revised up to 395,000. The four-week moving
average which is supposed to smooth these bumps rose to
389,000. The continuing claims fell to 3.31 million. This
is due to the expiration of benefits for people out of work
for an extended period. Over one million people have dropped
off the roles because their benefits have expired.

The Retail Sales report for all of January posted a -0.9%
drop and much deeper than expected. The culprit was the
bottom falling out of auto sales. The Auto component fell
-7.5% as incentives and low interest are no longer attracting
buyers. Without autos consumer sales actually rose +1.1% and
was very bullish. Traders saw the numbers and ran for cover
regardless of the bullish internals. If the period covered
was last week I would say it was duct tape, plastic, batteries
and bottled water but instead it was January. With all the
stocking up on food supplies and hardware for a potential
terrorist attack the odds are good the next weekly numbers
will be much higher than expected. Most attribute the surge in
January buying by consumers to a record number of gift cards
sold in December. Consumers normally spend more than the
amount of the gift card once in the store and that could
account for the bounce.

Friday we will get the Michigan Consumer Sentiment again
and estimates are for 82.4. Business Inventories are expected
to be flat at +0.2% and Industrial Production up slightly at
+0.3%. These are not the biggest problems for Friday. The
showdown at the UN corral is going to be on the top of the
list of potential market movers. It appears the UN inspectors
will bring a mixed message to the UN with the IAEA head
saying that inspections should continue for months and there
is no reason to rush into war. Hans Blix is reportedly going
to say that IRAQ cooperation has improved very slightly but
not enough to justify a continued effort. The Blix scavenger
hunt turned up some missile that had greater the range than
allowed by the UN mandate but I think everyone is splitting
hairs over it. The difference between 150 and 180 kilometers
is not material since the main reason for the rule was to
prevent him from hitting major cities of his neighbors. Kuwait
is the only country at risk from the current missile and it
would be at risk from a 150K model as well. Later today it
was reported that the "unconditional" approval to allow U2
spy planes to fly over Iraq was not unconditional after all
and Blix is going to tell the UN that Iraq has backed out
of the agreement.

After the bell today Dell Computer announced record earnings
and did not lower guidance as many had expected. Dell is
firing on all cylinders and is stealing market share from
everybody. Corporate sales up +20%, consumer sales up +38%
and overseas server sales up +47%. They said earnings would
be flat for the 1Q but for Dell that represents a victory
in the beleaguered PC sector. While everyone else is losing
ground Dell is seizing it. The only problem with the report
was the analysis that Dell still sees no expansion in capital
spending and its record profits came from stringent cost
controls and taking market share from others. Dell was up
in after hours but Nasdaq futures were down on the lack of
overall improvement in the tech sector. I have not seen a
Gateway commercial in weeks and I saw three within two hours
of the Dell announcement. Clever marketing on the part of
Gateway but it remains to be seen if it will help.

INTU also announced strong earnings on better than expected
sales of its tax software and lower than expected acquisition
expenses. They beat the street by +4 cents and raised estimates
going forward. Unfortunately this is a company specific event
as well and does not reflect on the software sector as a
whole.

AMZN finally broke support at $21 and dropped -5% on problems
in Internet retailing. The current move underway to collect
sales taxes on all Internet sales will remove one more reason
for shopping at Amazon. States are mobilizing to force everyone
to collect based on a simplified taxing plan and all the big
retailers are falling in line. They are agreeing to begin
collecting sales tax in the future in return for forgiveness
of taxes not collected in the past. States are using the club
of retroactive liability to enforce future collection. AMZN
had almost $4 billion in sales in 2002, $12 billion over the
last five years. Depending on the average tax rate across the
states they could have as much as a $1 billion tax liability.
The future is clear. Agree to collect and remit taxes peacefully
or go to court and end up paying $1 billion plus court costs
and penalties and still end up having to collect taxes in the
future. Not much of a decision process in my opinion. Now, add
an average of 7% to every product sold and suddenly AMZN has
a much harder path to continued profitability. Many of the
other major retailers have already agreed to the tentative
plan and the Internet coalition has already begun to fracture.

Okay, so what happened this afternoon? We were slowly bleeding
points and about to break 7600 when an explosion occurred. Not
a bomb but the force of impact was the same. The Dow gained
+152 points in about 55 minutes. It appears there was a freak
combination of unrelated events that shocked shorts into frantic
covering. First Medicare chief Thomas Scully told a congressional
panel that JNJ's Cypher stent is likely to win FDA approval
within the month. Dow component JNJ suddenly spiked almost +3
points in just minutes even though the potential approval had
been widely reported over the last 30 days.

Secondly and about the same time, reporters misread a press
release by UPS about electing HD CFO Carol Tome to the UPS
Board. The release said UPS was raising its dividend to 21
cents from 19 cents. Instead it was reported that HD was
increasing its dividend to 21 cents a quarter. Dow component
HD's stock at $20 rocketed on the news. The report was later
retracted.

Third there was a rumor that a very high up Iraqi military
officer with complete knowledge of where the weapons were
hidden, had defected and the UN was racing to get him out
of the area. Also, bogus but it had about the same impact
as a Saddam retirement announcement. Shorts caught off guard
by the sudden spike were scrambling to cover without knowing
why. The initial thought process is "no news, must be a buy
program, it will pass." When it does not pass they end up
behind the curve and chasing prices upward. Look at an
intraday chart and you will see the perfect picture of a
short squeeze. Futures have sold off after the close now
that these news items have filtered out to the public.

After the bell it was announced that the FBI was aware of
as many as 300 Al Qeada operatives/sympathizers currently in
the US and they had specific and credible evidence that 12
of these were planning the current attacks. The FBI is
supposed to be pulling out all the stops to find these
people before they can pull off the attack but despite
eyewitness reports they have been unable to do so. There
is evidently strong evidence that they have multiple targets
and they are dispersed across the country. The report said
new operatives had been infiltrated into the country for
this operation. While I believe some of this is true I have
to believe that this could be a strong over reaction by the
press to limited "hearsay" information. You would think if
the FBI had names they would be broadcasting these names
and any pictures every 15 min.

Tomorrow is likely to resemble a fast game of pin the tale
on the donkey. Up, down or sideways and probably all in
a hurry once the 10:AM update is over. It is the smoking
gun question all over again. Traders will probably end up
feeling like they have been blindfolded and spun in a circle.
Trying to predict the market reaction to the UN inspector
update is tougher than nailing Jell-O to the ceiling.

We tried to come up with a scenario given the information
at hand and then extrapolate it onto the market. It is
impossible. The US is going to war whether they have a
new resolution or a UN mandate or even a coalition of the
willing. I think that means it wants a very negative report
by inspectors and that is not what is reported to be coming.
A soft report that leaves the door open to a couple more
months of inspections will force a confrontation between
the US, the UN and several past allies. It will mean more
uncertainty for the markets and more anti American feelings
worldwide. That means more money withdrawn from the market
and more pressure on the dollar. It MAY also mean a delay
in the start of the war and a delay in getting over this
market hump.

We reached my two month target of 7700 on the Dow and the
next material support is the 78% retracement level at 7592.
We came within 36 points of hitting that level today. The
Nasdaq bounced off support at 1266 but after cracking the
1295-1300 level it is in trouble. I don't think the UN
meeting on Friday is the end of this process and that leaves
more uncertainty ahead. Keep those fears under control. You
have a 1 in 500 chance of dying by cancer and a 1 in 56
million chance of dying in a biological attack. I am more
afraid of another short squeeze while I am in the bathroom
and not at my PC than I am being killed by a terrorist. Of
course while I am writing this two police helicopters have
been circling over the mall in the next block for about the
last 45 min. Must be jaywalkers. (grin)

My problem is this. Will traders remain short over the 3-day
weekend in anticipation of an event or will they cover for
safety. Will longs go flat for safety or take out insurance
in the form of puts or short futures? The weekend has risk
for both sides. Longs fear an attack. Shorts fear no attack
and a limit up gap open on Tuesday. Personally I think the
longs have the most to fear. A devastating attack could knock
hundreds of points off the indexes at the open. No attack
would be bullish but the overall conditions of war, terrorists
and earnings still remain. We could get a small bounce but
should not get a monster. That analysis is worthless if a
presidential vacancy in Iraq appears. Using this analysis
I would assume longs, if there are any left, would exit
before lunch tomorrow depending on the UN report and reaction.
Exiting would produce selling. Buying insurance by shorting
futures would produce selling. Buying insurance with puts
would raise the VIX and Put/Call Ratio and show additional
fear and promote selling. Traders expecting the worst over
the weekend would short or buy puts and that should produce
selling. The wild card is no attack by noon, a report that
puts the war off 3-4 months and longs would buy the dip. How
you approach this is up to you. I am going into the weekend
flat and face Tuesday with no bias.

Enter Very Passively, Exit Very Aggressively!

Jim Brown
Editor


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

Whirlpool Corp. - WHR - close: 49.33 change: -0.63 stop: *text*

Company Description:
Whirlpool Corporation is the world's leading manufacturer and
marketer of major home appliances. Headquartered in Benton
Harbor, Michigan, the company manufactures in 13 countries and
markets products under 11 major brand names in more than 170
countries. (source: company press release)

Why We Like It:
What a difference an hour makes!  On Thursday afternoon there
were a plethora of attractive short candidates - stocks across a
wide variety of sectors falling to new relative lows, with no
clear underlying support.  But by the closing bell, the sudden
equity rally had created green candles (and possible reversal
signals) on many of those charts.  Such was not the case with
WHR.  The stock hit a fresh multi-month low today after the bears
clawed through $50.00.  This level, which acted as support over
the past two weeks, was bolstered by the 100-dma.  The technical
breakdown did not sit well with shareholders.  WHR moved steadily
lower throughout the session and set a low of $48.68.  The
subsequent late-day rebound was not convincing, as shares only
recouped a small portion of the intraday losses.

If the fresh double-bottom p-n-f sell signal, rising volume, and
downtrending daily stochastics (5,3,3) are any indication, WHR
could soon be trading below the point-and-figure chart's bullish
support trend at $47.00.  The daily chart shows no significant
support until $45.00.  Our profit-target for this play will be
set just above that level at $45.06.  We've set an entry trigger
at $48.67 in order to confirm downside momentum.  This is
particularly important, given the large amount of uncertainty
surrounding tomorrow's presentation by U.N. Weapons Inspector
Hans Blix.  What does Hans have to do with washing machines and
refrigerators?  Absolutely nothing.  But what he says tomorrow
morning could have a major impact on the major indexes.  For all
its technical weakness, WHR could easily bounce back if the
broader market zooms higher on eased concerns of an imminent war
with Iraq.  But if this doesn't occur, the bulls will have a very
tough time extending the late-afternoon gains.  Our expectation
is that Whirlpool could move sharply lower once it falls to new
relative lows.  Former support at $50.00 should now act as
resistance.  If the play is triggered, our stop will be set at
$50.56.  Long-term traders could give WHR additional room to move
with a stop above the 50-dma ($52.60), using the October lows
near $40.00 as a downside target.

Annotated daily chart - WHR:



Picked on February xxth at xx.xx
Results since picked:      +0.00
Earnings Date           02/05/03 (confirmed)





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

What the Blix Was That?
by Steven Price

The slide continued today, as it appears war fears only escalated
ahead of Hans Blix weapons report on Friday. At least for 75% of
the trading session.  With almost no bounce after the sell-off of
the last couple days, the major indices headed on another leg
down for most of the day, taking out support levels once again
and trading down to fresh four-month lows. Several non-equity
markets also confirmed bearishness for stocks, with the bond
market seeing buying and the market Volatility Index (VIX)
trading again back over 40%. Oil crept higher and gold got a
bounce.  It does seem that we are oversold and while I've been
looking for a big bounce at some point, so far that bounce has
not materialized.  However, we did get a powerful afternoon rally
that smacks of short covering ahead of the Hans Blix report to
the U.N. on Friday morning.  That has been the pattern in the
past, as we got similar big rallies ahead of the last Blix report
on January 27 (in the a.m.) and the Colin Powell presentation on
February 5.  The rally turned the Dow around 160 points from its
high to its low, before settling in with a loss of 8 points.

We have now sold off over 1100 Dow points since the New Year
rally that took us all the way up to 8869 and it seems ages ago
that we were looking at bullish signals in most major indices.
At that time we were looking at the 200-day moving averages, both
simple and exponential and using those pivotal levels to decide
whether we were looking at a rally that had legs.  The
President's plan to eliminate taxes on corporate dividends seemed
to give us reason to believe we may have seen a change in
fundamentals that supported a continued rally.  Since then, that
sentiment dissipated into an extreme bearish sentiment, following
a host of earnings reports.  It wasn't that companies were
missing earnings forecasts; in fact many actually beat those
fourth quarter estimates.  It has been the repeated downward
guidance for the upcoming year that seems to have triggered
concerns.  Of course, that seems to be just a small piece of the
puzzle, as geo-political concerns regarding an Iraqi invasion,
nuclear weapons in North Korea, and new terrorist threats from
Osama Bin Laden have dominated the news landscape.
Interestingly enough, we have seen several short-covering rallies
ahead of and during international developments, such as Hans Blix
last report on Iraqi weapons inspections and Colin Powell's
presentation to the U.N.  Like this afternoon, those rallies
seemed like powerful reversals, but were short-lived.  They have
led to many shorts (myself included) getting out of positions,
either by planned stop orders or by emotion that would have been
very profitable if they had just hung on.

Does this mean we should be hanging on through each event, or
allowing stops to lock in profits, then getting back in on the
bounces?  It is a question with different answers depending on
risk profiles.  Each trade we make, as option traders, involves
transaction costs, as well as losing out on the bid-ask spread
when we are forced to buy and sell those options with market
makers. In reality, if the trade moves far enough in our favor,
the bid-ask will be minimal in comparison to our profit.
However, in the current environment, when we are seeing so much
schizophrenic action, traders should take some time to add up all
of those costs and determine just how much getting in and out is
costing them in what seems like a clearly downtrending.
Certainly, it helps a trader sleep better at night not to get
whipped around and take the intermediate pain, but in the end, an
account may look much better if the position had simply been left
on, or at least allowed for a wider stop, until the trend
reversed. That is not to say there isn't plenty of value in
sleeping better at night.

The chances of a bounce are growing with each tick lower toward
our July levels. The July intraday lows in the Dow, SPX, OEX and
COMP are 7532, 775, 387 and 1192.  The closing lows were 7702,
797, 396 and 1229, each taking place the day before we bounced on
July 24 after setting new relative lows in the morning.  Today,
the Dow crossed that closing low, heading down to within 100
points of the July 24 intraday low, before bouncing today.  The
SPX came within 9 points of the July closing low and the OEX
within 11 points of the July closing low. The COMP traded as low
as 1261.   Does all of this mean that we've hit the bottom?
Anyone who saw the market drop in October knows there is still
some downside potential.  The Dow dropped as far as 7197 before
bouncing on October 10.  The OEX, however, did not hit the July
intraday lows before bouncing, although in October closed
slightly below the closing low.  The SPX broke below the July
lows on a closing and intraday basis, but not by a lot.  The COMP
made it all the way down to 1108.  If we get our third lower low
on this sell-off, then shorts will feel their oats in the near
future. However, we are definitely entering territory where the
drop is becoming extended and reaching one of two important
support levels.

In both July and October, it also felt like we were on a non-stop
train into a long dark tunnel, but the light appeared brightly
and surprisingly and painfully for the bears. It feels equally as
negative right now, but the difference is that we have an unknown
factor in war fears.  Theory holds that we will bounce when the
missiles start flying and what should be a short war gets
underway.  Many companies have blamed geo-political uncertainty
for a lack of business spending and Alan Greenspan has said we'll
have a better idea of what our economy truly looks like when we
get that uncertainty behind us. The only problem is, what if it
looks pretty much the same? In that event, Dow 7000 will look a
lot closer. For now the trend remains down, but most continued
rallies have begun with a big intraday bounce, as we got today.
While I'm still leaning heavily in the direction of calling it
short-covering ahead of the Blix report, history does tend to
repeat to some extent and traders need to keep that in mind if we
start to post some gains.
-----------------------------------------------------------------

Market Averages

DJIA ($INDU)

52-week High: 10673
52-week Low :  7197
Current     :  7749

Moving Averages:
(Simple)

 10-dma: 7921
 50-dma: 8385
200-dma: 8704

S&P 500 ($SPX)

52-week High: 1176
52-week Low :  768
Current     :  817

Moving Averages:
(Simple)

 10-dma:  837
 50-dma:  885
200-dma:  921

Nasdaq-100 ($NDX)

52-week High: 1734
52-week Low :  795
Current     :  951

Moving Averages:
(Simple)

 10-dma:  968
 50-dma: 1020
200-dma: 1021
-----------------------------------------------------------------

The Semiconductor Index (SOX.X):  The SOX has managed to hang in
above support at 260.  News from Intel that it was coming out
with a new chip, called the Manitoba, that could combine the work
of three chips and make up for the head start TXN and QCOM had in
the wireless sector, got mixed results.  INTC finished higher,
while TXN finished down slightly on the day.  QCOM got hammered,
losing $2.65 and breaking recent support at $36 to close at
$33.91.  The SOX finished slightly higher and after hours results
from Dell should set the tome tomorrow.  Dell matched estimates
and guided in line for the first quarter.  The stock finished up
over $1 in intraday trading, so signs are that traders were
looking for a muted forecast and were pleasantly surprised.

52-week High: 641
52-week Low : 209
Current:      264

Moving Averages:
(Simple)

 21-dma: 281
 50-dma: 302
200-dma: 339
-----------------------------------------------------------------

The VIX has recently been an awfully good indicator, forecasting
temporary market bounces each time it trades in the 40% range.
 It repeated that pattern today, trading up to 40.68 and
 remaining just above 40 for most of the day, but going no
 higher.  That was one of the likely signs that the equities were
 in for yet another intraday bounce and once again the Dow
 followed through on that signal. We bounced 160 Dow points at
 one point and finished the day just barely in the red after
 seeing an early triple-digit loss. Each bounce has eventually
 headed lower, but the signals have been reliable on an intraday
 basis.

CBOE Market Volatility Index (VIX) = 38.45 -0.65
Nasdaq-100 Volatility Index  (VXN) = 50.97 +3.54
-----------------------------------------------------------------

          Put/Call Ratio  Call Volume   Put Volume

Total          1.18        549,337       648,332
Equity Only    1.05        350,336       369,269
OEX            1.09         40,817        44,565
QQQ            2.77         45,082       125,091
-----------------------------------------------------------------

Bullish Percent Data

           Current   Change   Status
NYSE          40.6    - 2     Bull Correction
NASDAQ-100    32.0    - 5     Bear Confirmed
Dow Indust.   13.0    - 7     Bear Confirmed
S&P 500       35.6    - 6     Bull Correction
S&P 100       29.0    - 8     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  1.37
10-Day Arms Index  1.42
21-Day Arms Index  1.49
55-Day Arms Index  1.36


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       1241          1605
NASDAQ     1287          1843

        New Highs      New Lows
NYSE        46              182
NASDAQ      49              146

        Volume (in millions)
NYSE       1,725
NASDAQ     1,301
-----------------------------------------------------------------

Commitments Of Traders Report: 02/04/02

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 reduced long positions by 8,000 contracts and shorts
by 3,000, for a net increase of 5,000 shorts.  Small traders
increased long and short positions by about 8,000 contracts,
keeping the net relatively unchanged.

Commercials   Long      Short      Net     % Of OI
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%)
02/04/03      414,543   465,678   (51,135)   (5.8%)

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
01/14/03      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%
02/04/03      151,174    93,439    57,735     23.5%

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 increased long positions by approximately 2,000
contracts and shorts by 1,600.  Small traders increased short
positions by 1,000 contracts, leaving the long side close to
unchanged.


Commercials   Long      Short      Net     % of OI
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%)
02/04/03       40,934     50,992   (10,058) (10.9%)

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
01/14/03       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%
02/04/03       25,573     8,648    16,925    49.5)

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 increased long positions by 1,500 contracts, while
reducing shorts slightly.  Small traders increased shorts by
1,600, while seeing a slight reduction to the long side.

Commercials   Long      Short      Net     % of OI
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%
02/04/03       17,596    11,232    6,364      22.1%

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
01/14/03        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%)
02/04/03        4,583     9,424    (4,841)   (34.6%)

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 02-13-2003
                                                    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
  Bearish Play Updates:  CCMP

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

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

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

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

Cabot Micro. - CCMP - cls: 41.93 chg: -0.17 stop: 44.06 *new*

Intel surprised Wall Street today with its announcement of a new
wireless internet chip that is designed to compete with industry
leaders QCOM and TXN.  INTC traded higher on this news, while the
latter two stocks headed lower on fears of increased competition.
The semiconductor index took the news in stride, drifting lower
in an orderly fashion before moving quickly higher with the
broader market towards the end of the day.  The daily chart
reveals a lot of indecision in the SOX.X - It's spent most of the
past six sessions trading in the 260-270 range.  CCMP has
experienced similar consolidation above $41.00.  Interestingly,
this somewhat directionless trading has also been characterized
by a series of lower highs.  That's a positive sign for the
bears.  On Friday we'll be looking for shares to break through
yesterday's low of $41.31 and move towards psychological support
at $40.00.  While a move to new lows might present a shorting
opportunity, traders may first want to strongly consider waiting
for the SOX.X to provide sector confirmation by breaking below
its own relative low of 258.56.  Also note that our stop has been
moved down to $44.06, slightly above break-even.

Picked on January 31st at $43.70
Results since picked:      +1.77
Earnings Date           01/23/03 (confirmed)






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

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

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

Whirlpool Corp. - WHR - close: 49.33 change: -0.63 stop: *text*

Company Description:
Whirlpool Corporation is the world's leading manufacturer and
marketer of major home appliances. Headquartered in Benton
Harbor, Michigan, the company manufactures in 13 countries and
markets products under 11 major brand names in more than 170
countries. (source: company press release)

Why We Like It:
What a difference an hour makes!  On Thursday afternoon there
were a plethora of attractive short candidates - stocks across a
wide variety of sectors falling to new relative lows, with no
clear underlying support.  But by the closing bell, the sudden
equity rally had created green candles (and possible reversal
signals) on many of those charts.  Such was not the case with
WHR.  The stock hit a fresh multi-month low today after the bears
clawed through $50.00.  This level, which acted as support over
the past two weeks, was bolstered by the 100-dma.  The technical
breakdown did not sit well with shareholders.  WHR moved steadily
lower throughout the session and set a low of $48.68.  The
subsequent late-day rebound was not convincing, as shares only
recouped a small portion of the intraday losses.

If the fresh double-bottom p-n-f sell signal, rising volume, and
downtrending daily stochastics (5,3,3) are any indication, WHR
could soon be trading below the point-and-figure chart's bullish
support trend at $47.00.  The daily chart shows no significant
support until $45.00.  Our profit-target for this play will be
set just above that level at $45.06.  We've set an entry trigger
at $48.67 in order to confirm downside momentum.  This is
particularly important, given the large amount of uncertainty
surrounding tomorrow's presentation by U.N. Weapons Inspector
Hans Blix.  What does Hans have to do with washing machines and
refrigerators?  Absolutely nothing.  But what he says tomorrow
morning could have a major impact on the major indexes.  For all
its technical weakness, WHR could easily bounce back if the
broader market zooms higher on eased concerns of an imminent war
with Iraq.  But if this doesn't occur, the bulls will have a very
tough time extending the late-afternoon gains.  Our expectation
is that Whirlpool could move sharply lower once it falls to new
relative lows.  Former support at $50.00 should now act as
resistance.  If the play is triggered, our stop will be set at
$50.56.  Long-term traders could give WHR additional room to move
with a stop above the 50-dma ($52.60), using the October lows
near $40.00 as a downside target.

Annotated daily chart - WHR:



Picked on February xxth at xx.xx
Results since picked:      +0.00
Earnings Date           02/05/03 (confirmed)





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

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

Air Products - APD - close: 40.18 change: +0.10 stop: 42.01

Early session market weakness was strong enough to bring shares
of APD back below their $40 support level.  Shares hovered there
between $39.70 and $40.00 until the market's last hour surge
higher, which many believe was short covering ahead of the long
weekend (and Hans Blix's report tomorrow before the UN).  While
we're encouraged by the intraday lows, as bears on this stock
we're unhappy it was able to maintain a close above $40.  We
didn't hear much from New York today where APD's President was
due to offer comments at the Morgan Stanley Global Chemical
Conference.  We suspect that the late afternoon strength in APD
may have been due to the upgrade today for Du Pont (DD), a leader
in the chemical sector.  APD also put out their 10Q today and
inside was their 2003 outlook.  A cursory glance of the report
merely confirmed the lack of growth that the rest of the economy
is seeing.  Their 2003 outlook did not look much better.  They
did allude to a 2nd half recovery for electronics in 2003.  We'd
like to know what they are basing this on.  Bears need to be
aware that today's session on the broader indices looks like a
potential reversal day.  We can't support any reason for the
markets to recover and turn bullish but they are overdue for an
oversold bounce/rally, which could last longer than one session.
Be aware and keep your stops in place.

Picked on January 29th at $39.84
Results since picked:      -0.34
Earnings Date:          01/22/02 (confirmed)




---

Grainger - GWW - close: 44.70 change: +0.03 stop: 47.56

Tuesday's brokerage-induced rally wasn't enough to take GWW above
its descending regression channel.  With the broader market
heading lower on Wednesday, the bulls never really had a chance
to extend those gains.  Today's trading saw GWW continue to trade
in tandem with the Dow Jones.  That was good news for the bears
during most of the session.  The stock hit a morning low of
$44.00 and repeatedly found resistance at the 50-period moving
average on the 5-minute chart.  Shares finally found a bid during
the final 90 minutes of trading, thanks to a powerful end-of-day
rally in the Dow.  Although GWW finished in positive territory,
those intraday gains will probably be evaporated if the market
reacts negatively to Friday morning's developments at the U.N.
With Grainger showing no ability to move out of its descending
channel, the bears still appear to have the upper hand.  Risk-
averse traders may want to use a break-even stop at $45.59, just
above the top of the channel.  For the time being we'll maintain
our stop-loss at $47.56.  This will give us the added protection
of the descending 21-dma at $47.01.  New entries could be
evaluated on a move under the relative low of $43.76 or a failed
rally between $45 and $46, but we would prefer to see the stock
back under $45 before we entered any new positions.

Picked on February 7th at $45.59
Results since picked:      +0.89
Earnings Date           01/29/03 (confirmed)




---

Nordstrom Inc - JWN - cls: 17.05 chg: -0.18 stop: 18.01

The descent continues for shares of Nordstrom.  The stock fell
below the $17 mark again before (barely) participating in the
broader market last hour rebound.  It is somewhat surprising that
investors did not respond well to the retail sales numbers this
morning.  Consumers continued to spend and the report showed that
excluding autos, total retail sales for the month of January rose
1.3%.  This is a significant jump above the 0.5% increase
economists were expecting.  Normally, January is known for its
after-Christmas sales and discounts.  The RLX retail index
quickly fell to support near 244 and hit a new relative and
yearly low of 243.82 before rebounding.  We still believe this
sector and this stock offer bearish opportunities but be
forewarned that the broader indices appear ready for a potential
rebound, even if it's just an oversold bounce.  Plan your entries
accordingly and check your stop losses.  We would be very
surprised to see JWN trade back above the $17.75 mark any time
soon but a big triple-digit gain in the Industrials could cause
shorts to panic (as would any significantly positive news event).

Picked on January 27th at $17.98
Results since picked:      +0.93
Earnings Date           02/20/02 (confirmed)





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

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

Tractor Supply Co. - TSCO - cls: 32.49 chg: +1.16 stop: 35.31

This morning's release of the latest Retail Sales data gave
sector bulls something to cheer about.  Ex-auto sales showed a
1.3% increase, 0.8% better than expectations.  The December
numbers were also revised higher.  This data indicates that
consumer spending is on the rise.  However, any hopes for a
morning rally in the retail index were quickly dashed by the
overarching bearishness in the broader market.  The RLX.X
proceeded to tag a 52-week low of 243.82 before retracing some of
its losses in late-afternoon trading.  Investors might be
expecting a downtick in retail sales (with the notable exception
of the duct tape business) as war with Iraq becomes increasingly
likely.  In any case, this sector weakness provided the ideal
climate for a continued decline in TSCO.  The day started off on
a promising note as shares approached yesterday's low ($30.44)
and psychological support at $30.00.  However, the bears decided
to throw in the towel after the stock failed to set a new low.
Shares then experienced a powerful rebound, in spite of the
broader market weakness.  There was no news to explain this
rally.  Looking at the daily chart, we see a possible double-
bottom formation created by the Wednesday and Thursday lows.
This is an indication that TSCO may have put in a short-term
bottom.  Furthermore, it looks like the stock could add to its
gains if the major indexes continue higher tomorrow.  With this
in mind, we've taken the conservative approach of bailing out of
this play at current levels.  We'd rather close our hypothetical
trade for a small gain rather than set a tight stop that could be
quickly violated on Friday.  Traders who are willing to give TSCO
more breathing room could use a stop slightly above either $33.00
or $33.50.  We'll keep an eye on TSCO, watching for a failed
rally near the 200-dma ($34.91).  A rollover from this moving
average might yield another action point.

Picked on February 10th at $32.76
Results since picked:       +0.27
Earnings Date            01/23/03 (confirmed)






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

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

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

AMGN - Amgen Inc. - close: 51.78 change: -0.54 stop: *text*

It looked like another normal day in the markets on Thursday, as
things started out weak and ground lower from there.  AMGN
continued its retreat from the $54 resistance level, falling to
just above the $51 level by the end of the first hour, and then
began a slow consolidation around the $51.50 level.  The early
going looked rather ominous for shares of AMGN, but after failing
to break down throughout the afternoon a funny thing happened.
About 90 minutes before the close, a strong buy program hit the
markets and AMGN pushed briefly above the $52 level before
weakening at the close, coming to rest right on the ascending
trendline that has been supporting the stock since late
September.  The rebound off the lows looks encouraging, but we
sure would have liked to see the stock avoid that final drop.
Aggressive traders could certainly have entered the play on the
rebound from the $51 level, but those entries are certainly on
the high risk end of the spectrum. Should the bears come out
swinging again on Friday, AMGN's last line of defense is the 50-
dma ($50.60).  A breakdown under that level on a closing basis
will almost certainly prompt us to drop this un-triggered play.
At this time we're going to adjust our entry trigger to $52.51,
slightly above today's high.  If the play is activated we'll use
a stop at $50.49, under the rising 50-dma.  This strategy is
somewhat aggressive, because it assumes that AMGN will be able to
move through resistance at $54.00.  More conservative traders
could hold off on long positions until the stock moves above that
level.

Picked on February xxth at $xx.xx <- see text
Results since picked:       +0.00
Earnings Date            04/24/03 (unconfirmed)




---

Cytyc Corp. - CYTC - close: 12.69 change: +0.30 stop: 11.49 *new*

Cytyc's recent breakout above resistance at $12.00 really has the
bears on the defensive!  The stock showed excellent relative
strength yesterday, moving to new relative highs in spite of
solid losses in the major market indices.  That strength
continued to manifest itself on Thursday.  On a 5-minute chart,
we see that CYTC marched higher throughout the first half of the
session.  This was in stark contrast to the Dow Jones and NASDAQ,
which were moving in the opposite direction.  The stock then
stabilized in the $12.60-$12.70 area after setting a new multi-
month high of $12.75.  Some sector rotation was evident during
the last hour and a half, when CYTC traded in a narrow range
while the rest of the market posted some rapid gains.  It
appeared as though money was moving into beaten-down stocks that
had been trading near relative lows.  Technically, CYTC looks
poised to extend its gains.  Today's volume reading was the
highest in over two weeks, and the oscillators (MAD and daily
stochastics) continue to show uptrending action.  The PI
newsletter is currently up 4.7% in this long play.  We've raised
our stop-loss to $11.49 in an attempt to reduce our downside risk
to roughly 5%.  Aggressive short-term traders can think about
going long on a move above $12.75, but bear in mind that we've
set an exit target at $13.94.

Picked on February 11th at $12.12
Results since picked:       +0.57
Earnings Date            01/28/03 (confirmed)




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

IDEC Pharma. - IDPH - close: 29.46 change: -0.81 stop: 32.82

You'll recall from Tuesday's update that we were looking for IDPH
to head sharply lower if only the bears could dispatch support at
$30.00 (and our entry trigger at $29.99).  That level was finally
violated this morning when shares followed the BTK.X biotech
index to new relative lows.  The resulting sell-off took IDPH all
the way down to an intraday low of $28.38 before it stabilized
and gravitated back to the $29.00 area.  The sudden broader
market rally during the final 90 minutes of trading helped IDPH
to recoup a large chunk of its intraday losses.  These gains were
not a result of stock-specific strength; just about everything
moved higher with the major indices.  Shares finished with a 2.6%
loss and closed well below $30.00, which should now act as
resistance.  On a technical basis, IDPH is looking extremely
vulnerable to more selling.  The weekly chart shows no
substantial support at $20.00, and the daily stochastics (5,3,3)
still have room to fall towards the lower band.  We also like the
strong volume that accompanied today's breakdown.  If the market
resumes its downtrend tomorrow, new entries can be targeted on a
move under today's low.  Our stop is located at $32.82.  Traders
looking to minimize their upside risk might want to use a stop
just above Tuesday's high of $31.35.

Picked on February 13th at $29.99
Results since picked:       +0.53
Earnings Date            01/30/03 (confirmed)





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

CHZ     Chittenden Corp            25.57     +0.56

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

GTRC    Guitar Center             19.14     +1.11
NCOG    NCO Group                 15.10     +1.05

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

RE      Everest Re Group           50.66     +1.35
BCS     Barclay ADR                24.10     +1.80
ATR     AptarGroup Inc             28.35     +1.84
DF      Dean Foods                 40.49     +2.37
TBL     Timberland                 36.27     +1.07

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

AMZN    Amazon.com                 20.06     -1.07
LLY     Eli Lilly                  57.29     -1.60
OMC     Omnicom Group              53.54     -1.23
ITW     Illinois Tool Works        57.21     -1.48
ZOLL    Zoll Medical               34.46     -1.93
LEN     Lennar Corp                50.94     -1.61
LLL     L-3 Communications         38.96     -1.65
PFCB    PF Chang                   31.57     -1.48
NAV     Navistar Intl.             21.94     -1.11
CCU     Clear Channel Comm.        35.02     -1.68

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

STE     Steris Corp                23.70     -0.40
VLO     Valero Energy              36.01     -0.74
GALN    Galen Holdings             23.54     -0.86
CPKI    California Pizza Kitchen   24.44     -0.45




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