Option Investor
Newsletter

Daily Newsletter, Tuesday, 02/25/2003

HAVING TROUBLE PRINTING?
Printer friendly version
PremierInvestor.net Newsletter                 Tuesday 02-25-2003
                                                   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:      Long For Peace, Short For War
Market Sentiment: Bulls Win!  Bulls Win!
Play-of-the-Day:  What Economic Weakness?

-----------------------------------------------------------------
U.S. Market Numbers
-----------------------------------------------------------------
MARKET WRAP  (view in courier font for table alignment)
-----------------------------------------------------------------
      02-25-2003           High     Low     Volume Advance/Decline
DJIA     7909.50 + 51.30  7920.49  7719.64 1.74 bln   1853/1372
NASDAQ   1328.98 +  6.60  1331.35  1291.96 1.37 bln   1687/1537
S&P 100   424.88 +  3.41   425.52   413.69   Totals   3540/2909
S&P 500   838.57 +  5.99   839.55   818.54
W5000    7949.38 + 54.30  7956.53  7771.79
RUS 2000  361.53 +  2.98   361.20   354.09
DJ TRANS 2041.83 + 24.10  2041.91  1973.63
VIX        36.12 -  0.65    38.13    35.92
VXN        44.33 -  0.55    47.27    44.04
Total Volume 3,331M
Total UpVol  1,935M
Total DnVol  1,334M
52wk Highs  146
52wk Lows   335
TRIN       1.40
PUT/CALL    .75
-----------------------------------------------------------------

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

Long For Peace, Short For War

And I on the opposite side will be. I modified that phrase from
Paul Revere's midnight ride text only slightly to reflect investor
sentiment this week. It seems everyone is going in opposite
directions as conflicting signals are seen. Iraq news is driving
traders to drink when faced with dozens of news conferences per
day and differing opinions expressed in each. This is Yo-Yo
trading at extremes!

Dow Chart - Daily


Nasdaq Chart - Daily


The day started out very ugly with news overnight that North
Korea had fired another missile into the Sea of Japan. The saber
rattling is moving to a fever pitch and the Asian markets did
not react well. This set up the US markets for a fall and fall
they did. We gapped down and came very close to 7700 once again
before the buyers appeared.

It is amazing they appeared at all once the Consumer Confidence
numbers were announced. The headline number came in at 64.0 and
well below consensus estimates at 76.50. Everyone expected a
lower number but nobody was even close to the disaster that was
announced. The present situation component fell from 75.3 to
61.6 and the expectations component fell to 65.6 from 81.1.
Consumers planning on buying autos and major appliances were
dropping but there was a small gain in home buyers. This
was the lowest headline number since October 1993 and indicated
the rate of decay was accelerating. It was the largest drop
since Sept-2001. War, high energy prices, rising unemployment
and weak markets all weighed on consumers. Orange terror alerts
did not help either.

Offsetting the Consumer Confidence was the existing home sales
numbers which came in at 6.09 million compared to estimates
of 5.80 million. The gains surprised everybody again and set
a new record. House prices are beginning to fall and many
thought that could be the incentive dragging the last round
of buyers off the couch. Prices in the Midwest have dropped
-5.5% in the last two months. The west and northeast prices
are still rising slightly. The south dropped -1.4% for the
month. The comments by Fed members last week that they will
not raise interest rates anytime soon gave the housing sector
one more reprieve for the spring selling season.

Chain Store sales declined for the third consecutive week
despite the rush to buy duct tape, batteries and plastic.
Wal-mart said it helped them but evidently the other dept
stores lost sales. Sales have dropped due to the big storm
as well. The estimates for monthly sales growth have now
been lowered from flat to -0.5% overall. With the President's
Day sale a bust in the northeast the earnings for retail
stores could be tough for the quarter.

Oil prices continue to rise and are showing no signs of easing.
There are strong fears that Iraq may blow up its wells and
take that three million barrels of daily supply out of the
market for 6-12 months. That would be a serious problem with
Venezuela still not at 100%. With gas prices well over
$2 a gallon in many places the consumer is feeling the pain.
Every dollar increase per barrel amounts to a $7 billion
undeclared monthly tax on consumers. With oil reaching $37.20
today that is $12.20 over the base rate that OPEC strived
to maintain. That is $85 billion in excess costs being
passed to consumers each month with no end in sight.

This tax is being passed on to manufactures as well and
earnings revisions are being made on a daily basis due
to higher oil. 8% of the S&P set a new 52-week low today
and the new lows at 335 beat new the new highs of 146 better
than 2:1 in the broader market. This was the 15th consecutive
day that the lows beat highs. 40% of the S&P have already
warned for the 1Q.

The floor traders on the NYSE said the big dip at the open
and after the confidence numbers was due to heavy institutional
selling. There were a couple comments that the strength of
the selling was encouraging. It appeared that institutions
wanted out at any price. While this was limited to only a
few of the thousands of institutions, traders thought maybe
we were nearing a capitulation event and something we could
build a real bottom upon. With the rebound this afternoon
that thought evaporated. The dip buyers are alive and well
and they did overcome some decent selling resistance to
power the Dow back to a +187 point rebound from the days
lows. There was also some asset allocation taking place
again with selling in bonds and buying of stocks. This has
happened each time the Dow traded around the 7700 level. It
would appear that other institutional investors are deciding
that bonds are not going higher with heavy supply coming to
market in the near future and the risk of stocks going much
lower is slim. Hope they are right.

After the bell today HPQ announced earnings that beat the
street by a penny and affirmed earnings for the current
quarter. Unfortunately they missed revenue targets by an
analyst mile and gave a cautious outlook. Revenue was only
$17.88 billion vs analysts estimates of $18.47. Close enough
for me but the stock traded down in after hours. Carly
Fiorina followed the pattern of those early announcers and
said the environment is uncertain and predictions of
performance were very difficult. The HPQ CFO declined to
comment on tech spending trends in general claiming limited
visibility.

This cautious HPQ stance weighed on the futures after the
close and it would appear the open may not contain a
continuation of today's rebound. We closed just barely over
the 7900 level and below strong resistance at 7950. There
are no major economic reports on Wednesday and that means
we are stuck depending on stock news and war news for
direction.

Depending on how you draw the lines the Dow has serious
resistance at every 50 point increment between 7900 and 8150.
There have been 12 major gap down days since Jan-23rd and
nine miraculous recoveries. While there have been some
spectacular rebounds we are trading in a range -500 to -700
points below those Jan-23rd levels. Don't get me wrong. The
rebound from 7700 today was amazing. Especially considering
the confidence numbers were at 13 year lows. Still the
pattern is clear. The rebounds eventually fail and we start
the process over again from a lower high. According to the
charts that lower high on this bounce could come anywhere
between 7900-8000 but probably not over 8000. This sets up
the next dip as early as tomorrow. Considering most funds
and institutions are not reactionary and they plan tomorrows
moves only after fully evaluating today's reports and market
reaction, that immediate direction is probably not up.

The NDX closed at 999.24 and could not break that 1000 barrier
but the Nasdaq Compx managed to edge just slightly over 1325.
The tech stocks are the wild card tonight. If they react
positively to the HPQ news the Nasdaq could throw just
enough confusion to the bears to keep them off balance.
The only sure bet is that volatility will be strong and
we will continue to see big moves in both directions.

Enter Very Passively, Exit Very Aggressively!

Jim Brown
Editor


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

Bulls Win!  Bulls Win!
by Steven Price

A day without geo-political news would be like a day without,
without....   I'm having a hard time remembering just what that
would be like.  In the last 48 hours, we have seen the U.S. and
Britain submit a new U.N. resolution, France and Germany counter
with one of their own, Saddam Hussein defy the weapons
inspectors' request to destroy missiles and North Korea launch a
missile test of their own.  It was enough to send the markets
reeling early today and that was before we got the release of the
lowest Consumer Confidence number in ten years.  That release
pushed us a little further downhill and got the markets back into
an area we last saw in mid-February.  It seems like just a couple
of days ago that we were breaking through Dow 8000 and it
appeared that investors had shaken off the geo-political concerns
that have weighed heavily on the broader markets.  Oh wait - it
was just a couple of days ago.   In any case, the sell-off looked
decisive until mid afternoon, when the bulls came back with a
fury. Not only did we make up the entire loss, we made it all the
way into the green on the day and blasted through 7900 to boot.
It now appears that another run at Dow 8050, where the rallies
over the past few days have failed, could be in the cards.  If
the recent news wasn't enough to inspire a true sell-off, then it
may be hard to imagine what will.  The U.S. comments that North
Korea's missile was not a concern may have soothed some traders,
who figure Saddam's reluctance is old news, but whatever the
reason for the big turnaround, it underscored the
unpredictability of the current environment.

While we had been seeing quite a reversal over the last couple of
days, we were bombarded with plenty of news to scare investors
away and still got a bounce above the February lows in the
Dow/SPX/OEX.  The Dow transports are a different story, however.
The transports have received a good deal of attention lately, as
they have not only taken out February lows, but also tested those
of October, when it last seemed the sky was falling.  Dow
theorists, going back to the existence of the Rails Index
(replaced by the TRAN for purposes of Dow theory), look to this
index for confirmation of activity in the Dow Industrials - the
TRAN's more heavily watched sister.  As the price of fuel has
risen, the transportation stocks continued to struggle and gave
us overall bearish signals. Today's drop took us to levels not
seen since the week following the September 11 attacks, when
airline stocks to an enormous tumble. This time war fears have
driven up the cost of fuel and created jitters about a lack of
travel that have also weighed on the sector. However, we got a
huge bounce after taking out those lows and left us wondering
whether the move is signaling at least a short-term bottom as the
October low brought back the buyers.

In contrast to Saddam's refusal to destroy his missiles, as
requested, chief weapons inspector Hans Blix said that the
country has begun to show signs of increased cooperation the past
few days.  Whether that is simply window dressing and should be
ignored on a national front is really irrelevant to investors who
should be aware that another extension of the inspection deadline
could lead to at least a short-term rally.  As time moves further
along, so does the possibility that the invasion could be put off
through another hot season in the Middle East.   While that seems
unlikely given the latest U.S. resolution, there is still enough
international resistance to the U.S. plans to make us aware that
the direction of the market can continue to whipsaw with each new
development.  It seems the U.S. is pushing the envelope and has
decided that a direct resolution authorizing force would only
hinder its invasion plans. By wording the new resolution, as they
did, so that U.N. simply reinforces the idea that Iraq has failed
to comply with resolution 1441, which directed it to disarm, the
U.S. can rely on 1441 for its authority to invade.  An explicit
resolution for military force may be defeated, and it would put
the U.S. in a much hairier position.  This way it can simply
invade and say the parameters were previously set and have been
violated.  President Bush said today that the U.S. does not need
another resolution to launch an attack and that it would consider
a French vote against its resolution very unfriendly.  The other
factor we need to consider is just how a war will affect the
markets.  While the uncertainty surrounding the possibility has
helped keep a lid on any rallies, the theory advanced most often
seems to be that once the missiles start dropping, it is time to
buy.  While that pattern may have been the way it happened last
time, it is now 12 years later and there is no guarantee it will
happen again.  However, if enough traders believe it to be the
case, it may become a self-fulfilling prophecy.

Of course, even if it does happen that way, we still have a host
of economic problems that underlie the market.  Businesses still
aren't spending and Consumer Confidence is sinking, indicating a
consumer less willing to spend, as well.   Certainly from these
levels, that looks bearish, but once the war uncertainty is
behind us, we may have a better idea what fair market value
really is.  Right now, the geo-political uncertainty is being
blamed for companies' reluctance to spend, but I think there is
certainly more to it that the current environment is simply
masking.  For now the trend remains down and looking at a weekly
chart of the Dow, which filters out the day-to-day moves, it
simply looks like we bounced to another lower high just above
8000. It would be the third in a series since last December and
gives us little reason to expect a rebound.  Today's big
turnaround may signal another couple days of heading higher, but
until we break the Dow 8150-8160 resistance, these intermediate
rallies are like putting perfume on a pig. However, when a big
uncertainty is lifted, we may see institutions do another round
of buying, expecting some pickup in spending, consumer confidence
and lower fuel costs.  It's not that fuel costs will dive when
the bullets fly, but rather the war will have started and most
are expecting it to be a short one.  We can't really start the
clock ticking for lower fuel costs until the war starts and there
is some end in sight.  If we don't get a rally after war jitters
are behind us, then it could be a very steep drop from whatever
level we happen to be trading at that time, since we will be out
of excuses.

The one index that has been giving me fits is the Semiconductor
Index (SOX).  It has been a good correlative tool in the past
year to predict market direction, but it managed to hold gains
through much of the recent action, contrary to the past couple of
days in the broader markets. Today, that finally ended as the SOX
dropped 11 points intraday before catching a boost late with the
broader markets.  However, with the Nasdaq Composite bouncing
back above 1300, this morning's breakdown must be called into
question.  If we are unable to get back under that mark, then it
may be time for another test of 1350.  While I do think we could
test the October lows around 1100, 1300 is the next support level
to break on a closing basis.  We did make it down to 1261 a
couple of weeks ago and at that time it looked like 1100 would be
only a matter of days.  However, we bounced almost 100 points and
1300 is close to the 50% retracement of that low and the recent
high (actually 1302).  A failure back below the 50% mark might
indicate another test of the bottom and as close as it is to the
previous support at 1300, that should be our gauge.  We did trade
below that level intraday and that's a start, but without a
close, it is far less decisive, as we say it was successfully
defended by the bulls.

The big reversal today can certainly be considered bullish, since
in spite of all the bad news, we still managed to find dip
buyers.  Stayed tuned for a run at Dow 8050 and then stronger
resistance at 8150. Above that is the H&S neckline around 8200
and previously strong support (which could now act as resistance)
at 8300. The bulls may have won today's battle, but there are
still plenty of resistance levels above to contend with.

(Title Disclaimer: This former Chicagoan has been waiting to hear
those words since Michael Jordan left town and today's trading
session seemed to be the best and possibly last opportunity to
use them, which says as much about the stock market as it does
about the team)
-----------------------------------------------------------------

Market Averages

DJIA ($INDU)

52-week High: 10673
52-week Low :  7197
Current     :  7910

Moving Averages:
(Simple)

 10-dma: 7900
 50-dma: 8292
200-dma: 8634

S&P 500 ($SPX)

52-week High: 1176
52-week Low :  768
Current     :  839

Moving Averages:
(Simple)

 10-dma:  835
 50-dma:  876
200-dma:  914

Nasdaq-100 ($NDX)

52-week High: 1734
52-week Low :  795
Current     :  999

Moving Averages:
(Simple)

 10-dma:  989
 50-dma: 1013
200-dma: 1014
-----------------------------------------------------------------

The Semiconductor Index (SOX.X):  The SOX almost gave us the
breakdown I have been looking for to confirm broader market
weakness.  Alas, it recovered on the afternoon market-wide rally
to finish off on 2.21 point son the day.  However, it did finish
down on the day, after trading as low as 281.40 and appears out
of steam with the 300 resistance level sitting just above. The
other possibility that I am beginning to consider, however, is
that this index may not be as correlative to the broader markets
as it has been in the recent past. It seems unlikely since it is
a good barometer of spending and demand in the tech sector, but
if it doesn't work for those purposes I'm not going to hang on
forever. The current environment is obviously tough to predict
with just about any sector index, considering the geo-political
factors now in play, but for the time being, a more politically
sensitive sector may reflect the broader markets better.

52-week High: 641
52-week Low : 209
Current:      289

Moving Averages:
(Simple)

 21-dma: 277
 50-dma: 296
 200-dma: 332
-----------------------------------------------------------------

The VIX remains back in its recent pattern between 35% and 40%.
We have now seen it test the bottom twice, closing as low as 34%,
but no closes above 40%.  This morning's drop looked to have
plenty of room, as the VIX never made it much above 38%, but the
intraday bounce put it in reverse, finishing down on the day.
Right now the schizophrenic market action is being reflected in
option premium levels that vary just as quickly as equity values.
I will continue to rely on 40% as an indicator of a possible
bounce in equities after a drop and rely on 34-35% as a warning
that a pullback in equities may be upon us following a rally.

CBOE Market Volatility Index (VIX) = 36.12 -0.65
Nasdaq-100 Volatility Index  (VXN) = 44.33 -0.55
-----------------------------------------------------------------

          Put/Call Ratio  Call Volume   Put Volume

Total          0.75        569,482       427,474
Equity Only    0.56        424,521       237,173
OEX            1.89         23,486        44,493
QQQ            1.27         44,692        56,707
-----------------------------------------------------------------

Bullish Percent Data

           Current   Change   Status
NYSE          39.5    - 1     Bull Correction
NASDAQ-100    33.0    - 2     Bear Confirmed
Dow Indust.   13.3    - 3     Bear Confirmed
S&P 500       33.0    - 2     Bull Correction
S&P 100       28.0    - 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  1.41
10-Day Arms Index  1.26
21-Day Arms Index  1.34
55-Day Arms Index  1.34

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       1667          1174
NASDAQ     1633          1457

        New Highs      New Lows
NYSE        60               89
NASDAQ      85               98

        Volume (in millions)
NYSE       1,759
NASDAQ     1,370
-----------------------------------------------------------------

Commitments Of Traders Report: 02/18/02

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 added 11,000 contracts to the long side and 9,000 to
the short side, for a net reduction to the overall short
position. Small traders took 5,600 contracts off the long side
and 4,000 off the short position.

Commercials   Long      Short      Net     % Of OI
01/28/03      422,232   468,586   (46,354)   (5.2%)
02/04/03      414,543   465,678   (51,135)   (5.8%)
02/11/03      412,333   472,156   (59,823)   (6.8%)
02/18/03      423,871   481,871   (58,000)   (6.4%)

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
01/28/03      142,734    85,567    57,167     25.0%
02/04/03      151,174    93,439    57,735     23.5%
02/11/03      161,126    95,618    65,508     25.5%
02/18/03      155,475    91,102    64,373     26.1%

Most bearish reading of the year:  36,513 - 5/01/01
Most bullish reading of the year: 114,510 - 3/26/02

NASDAQ-100

Commercials reduced the long side by 1,000 contracts and the
short side by 3,000.  Small traders reduced long positions by
 4,000 contracts and added 500 contracts to the short side.

Commercials   Long      Short      Net     % of OI
01/28/03       37,955     49,321   (11,366) (13.0%)
02/04/03       40,934     50,992   (10,058) (10.9%)
02/11/03       39,412     53,818   (14,406) (15.5%)
02/18/03       38,486     50,501   (12,015) (13.5%)

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
01/28/03       25,814     7,576    18,238    54.6%
02/04/03       25,573     8,648    16,925    49.5%
02/11/03       29,667     8,915    20,752    53.8%
02/18/03       25,482     9,425    16,057    46.0%

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 long positions by 1,000 contracts and left
the short side close to unchanged.  Small traders reduced the net
short position by 500 contracts.

Commercials   Long      Short      Net     % of OI
01/28/03       16,013    11,574    4,439      16.1%
02/04/03       17,596    11,232    6,364      22.1%
02/11/03       19,826    11,800    8,026      25.4%
02/18/03       18,812    11,939    6,873      22.4%

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
01/28/03        4,838     7,836    (2,998)   (23.7%)
02/04/03        4,583     9,424    (4,841)   (34.6%)
02/11/03        5,390     9,300    (3,910)   (26.6%)
02/18/03        5,561     8,973    (3,412)   (23.5%)

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


===============
PLAY-of-the-Day  ((new BULLISH Active Trader/non-tech play))
===============

Danaher Corp. - DHR - close: 64.32 change: +0.90 stop: *text*

Company Description:
Danaher Corporation is a leading manufacturer of Process /
Environmental Controls and Tools and Components (source: company
press release)

Why We Like It:
A cursory glance at Danaher's website shows that the company has
a diverse range of products, with separate divisions that manufacture
everything from hand tools to industrial inkjet
coding equipment to water quality testing products.  This
widespread business strategy is part of an effort by DHR to avoid
the cyclical gyrations of any one particular industry.  If the
past few months of stock movement is any indication, that
strategy just might be working.  Even though signs of an economic
rebound have been few and far between, shares of DHR are in the
midst of a multi-month uptrend.  The stock has traced a reliable
trend of higher lows ever since it bottomed out at $52.60 in
September.  In late-January shareholders enjoyed another rebound
from that trend after Danaher reported strong fourth-quarter
earnings that beat consensus estimates by two cents.

The latest price action in DHR suggests that the stock might be
headed for a test of the multi-month highs near $68.00.  Shares
have displayed good relative strength (versus the Dow Jones) ever
since the aforementioned trendline was tested on February 13th.
DHR is trading above its 50-day and 200-day moving averages - the
latter of which appears to be providing support - and has just
broken to new relative highs.  Today's breakout came on the
strongest volume reading of the month.  Bulls will also be
pleased with the point-and-figure chart.  DHR has reversed into a
column of "X" after rebounding from bullish support.  A trade at
$65.00 would create a double-top buy signal.  At the current rate
of ascent, it looks like the stock could reach the $68.00 region
within a month.  This would provide a reasonable upside target
for short-term traders.  We're going to be more aggressive in
targeting a move the $70.00 area.  Of course, we wouldn't
hesitate to take our hypothetical profits off the table if shares
rolled over near $68.00. As a precautionary measure, we won't
enter this paper trade until DHR trades at or above $64.36.  If
the play is activated our stop will be set at $61.49, below the
200-dma.  This sets up a risk/reward ratio of roughly 1:2.
Traders with a more conservative approach could use a stop just
below $62.00.

Annotated chart - DHR:



Picked on February xxth at $xx.xx <-- see text
Results since picked:       +0.00
Earnings Date            01/30/03 (confirmed)







=================================================================
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                  Tuesday 02-25-2003
                                                    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:  IBM, SLAB

Stock Bottom / Active Trader
  New Bullish Plays:     DHR
  Bearish Play Updates:  APD
  Closed Bearish Plays:  JWN

High Risk/Reward
  Bullish Play Updates:  AMGN, TECD
  Bearish Play Updates:  AW, CTAC, IDPH
  Closed Bullish Plays:  CYTC

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

Intl Business Mach. - IBM - cls: 79.07 chg: +0.51 stop: *text*

While Premier is not yet triggered in our bullish IBM play, we
are encouraged by the stock's strong rebound late this afternoon.
Early this morning shares gapped down and floated to support near
$77.00 where buyers held the selling at bay.  The negative
confidence numbers, Iraq fears did little to boost investors'
desire to buy stocks.  We're still looking for IBM to trade at or
above our trigger price of $80.06 before going long.  This will
put the stock above the $80 resistance level and its 50-dma.
What's going to make this a tough battle for IBM bulls was news
after the bell by EDS, the world's second largest IT out-sourcing
company behind IBM.  EDS said that while they are not adjusting
their current 2003 earnings targets they do see plenty of risks
and may not meet those earnings goals.  IT servicing is a huge
part of IBM's annual revenues and if EDS is having trouble then
IBM is sure to feel the same issues.  Good thing we have that
trigger to let some momentum confirm the move for us.

Picked on February Xth at $xx.xx
Results since picked:      +0.00
Earnings Date           01/16/03 (confirmed)




---

Silicon Labs - SLAB - close: 26.49 change: -0.13 stop: 23.99

The good news is that SLAB is out performing its peers in the
chip sector.  The bad news is that means it's trading sideways.
Shares of SLAB have been able to maintain their recent gains and
the bounce today showed at least some strength near the $26 level
for SLAB.  When the chip sector gets ready to move higher again,
SLAB should be a leader.  Right now the SOX has been struggling
to break the 300 level and today's lows showed support and a
bounce near 280.  We'll look for another run back to 300 and
bulls will be hoping for a breakout soon.  This might be an
attractive entry point for bulls and a stop under today's lows
would not be too risky for a very conservative trader.  Another
level to consider for stops would be under $25.50 or under the
$25 mark.  We're going to leave ours at 23.99 for now.

Picked on February 20th at $25.74
Results since picked:       +0.46
Earnings Date            01/22/03 (confirmed)






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

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

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

Danaher Corp. - DHR - close: 64.32 change: +0.90 stop: *text*

Company Description:
Danaher Corporation is a leading manufacturer of Process /
Environmental Controls and Tools and Components (source: company
press release)

Why We Like It:
A cursory glance at Danaher's website shows that the company has
a diverse range of products, with separate divisions that manufacture
everything from hand tools to industrial inkjet
coding equipment to water quality testing products.  This
widespread business strategy is part of an effort by DHR to avoid
the cyclical gyrations of any one particular industry.  If the
past few months of stock movement is any indication, that
strategy just might be working.  Even though signs of an economic
rebound have been few and far between, shares of DHR are in the
midst of a multi-month uptrend.  The stock has traced a reliable
trend of higher lows ever since it bottomed out at $52.60 in
September.  In late-January shareholders enjoyed another rebound
from that trend after Danaher reported strong fourth-quarter
earnings that beat consensus estimates by two cents.

The latest price action in DHR suggests that the stock might be
headed for a test of the multi-month highs near $68.00.  Shares
have displayed good relative strength (versus the Dow Jones) ever
since the aforementioned trendline was tested on February 13th.
DHR is trading above its 50-day and 200-day moving averages - the
latter of which appears to be providing support - and has just
broken to new relative highs.  Today's breakout came on the
strongest volume reading of the month.  Bulls will also be
pleased with the point-and-figure chart.  DHR has reversed into a
column of "X" after rebounding from bullish support.  A trade at
$65.00 would create a double-top buy signal.  At the current rate
of ascent, it looks like the stock could reach the $68.00 region
within a month.  This would provide a reasonable upside target
for short-term traders.  We're going to be more aggressive in
targeting a move the $70.00 area.  Of course, we wouldn't
hesitate to take our hypothetical profits off the table if shares
rolled over near $68.00. As a precautionary measure, we won't
enter this paper trade until DHR trades at or above $64.36.  If
the play is activated our stop will be set at $61.49, below the
200-dma.  This sets up a risk/reward ratio of roughly 1:2.
Traders with a more conservative approach could use a stop just
below $62.00.

Annotated chart - DHR:



Picked on February xxth at $xx.xx <-- see text
Results since picked:       +0.00
Earnings Date            01/30/03 (confirmed)





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

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

Air Products - APD - close: 38.39 change: -0.13 stop: 42.01

Today's session started off on a bearish note as APD moved
sharply lower during the first half-hour of trading.  Not only
was the stock pressured by weakness in the major indexes, but
also by downward gaps in shares of fellow chemical companies DD
and DOW.  Shares might've also been impacted by Monday evening's
news that Air Products had agreed to acquire Sanwa Chemical
Industry, a Japanese producer of epoxy curing agents and
specialty resins.  At its worst levels, APD moved through $37.00
and fell to prices not seen since October 2001.  Of course if you
followed the market today you're probably aware of the dramatic
reversal rally that took hold after 12:00 EST.  APD followed the
Dow Jones into positive territory and finished with a fractional
gain.  This created a rather bullish-looking candlestick on the
daily chart.  However, without any significant follow-through on
Wednesday the stock could easily move back towards the $37.00
region.  APD has traced a series of lower highs over the past six
sessions and has overhead short-term resistance at $39.00.  A
failed rally near this area might provide a shorting opportunity.
In terms of risk management, we're maintaining our stop-loss at
$42.01.  This is roughly 5.4% from our entry point.  Traders with
a more conservative strategy could use a stop slightly above
$41.00 or the descending 21-dma at $40.16.  It's been more than a
month since APD last traded above that moving average.

Picked on January 29th at $39.84
Results since picked:      +1.45
Earnings Date:          01/22/02 (confirmed)





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

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

Nordstrom Inc - JWN - cls: 17.00 chg: +0.37 stop: 17.76

Negative news from three large retailers sent JWN sharply lower
on Monday.  Federated and JC Penney reduced their outlook for
February same-store sales, saying that the recent blizzard in the
Northeastern part of the country had kept many potential
customers at home.  Sector leader Wal-Mart echoed those comments
when it said sales were running at the low end of the expected
range for February.  These developments helped to push JWN to new
multi-month lows.  Then came the proverbial "nail in the coffin";
Tuesday morning's release of the latest consumer confidence
number, which came in at 64.  Analysts had been looking for a
result of 77.  This disappointing data pressured the RLX.X retail
index in early trading.  JWN followed the sector lower and pegged
an intraday low of $16.06 - which just so happened to be the
location of our profit-target.  This short play was closed out
for a gain of 10.6%.  We placed our exit price at $16.06 because
we knew the stock might begin to firm up as it approached whole-
number support at $16.00.  The bears did indeed throw in the
towel once shares formed an intraday double-bottom near that
level.  JWN followed the Dow Jones higher during the second half
of the session and finished with a 2.2% gain.  While longer-term
traders might be maintaining short positions in hopes that shares
will retest the October lows in the $15.00-$15.50 region (the
daily chart shows that the multi-week downtrend hasn't yet been broken),
we're more than happy to part ways with Nordstrom and
move on to stocks with more downside potential.  Bears need to be
aware that the reversing daily stochastics (5,3,3) and strong
volume behind today's gains are signs that JWN may have put in a
short-term bottom.

Picked on January 27th at $17.98
Results since picked:      +1.92
Earnings Date           02/20/02 (confirmed)






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

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

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

Amgen Inc. - AMGN - close: 53.86 change: +0.71 stop: 51.18

Proving that it still has relevance, AMGN's ascending trendline
once again provided support on this morning's pullback.  With the
Biotechnology index (BTK.X) deep in the red and well below the
315 support level, AMGN just couldn't buck that weakness and fell
to just above $52, before beginning a truly impressive rebound.
One factor driving the stock's rally today may have been comments
from the company that its sees 25-27% EPS and 30-32% revenue
growth for the 2002-2005 time period.  Aggressive traders that
took advantage of the morning weakness got a great entry into the
play, as AMGN recovered all of the early drop and most of the
losses from Monday as well, closing at the high of the day. The
action of the past few days is a perfect synopsis of how intraday
traders can play AMGN -- buy the dips and harvest gains on the
breakout moves.  Every time the stock breaks out to a new high
(like last Friday), the bears push it back for another test of
support, which continues to climb.  So it's very likely that the
next high-odds entry point will come on a pullback near the
$52.50 level (also the site of the 20-dma), just above that
trendline, now at $52.15.  Aggressive traders that want to game a
breakout move really need to wait for AMGN to clear $55 on
continued strong volume, but beware of the risks.  That strategy
has not been fruitful in this stock lately.  Those who are
looking to reduce their downside risk could use a stop just below
$52.00.  Our stop is still located at $51.18.

Picked on February 14th at $52.51
Results since picked:       +1.35
Earnings Date            04/24/03 (unconfirmed)




---

Tech Data Corp. - TECD - close: 21.97 change: +0.31 stop: 20.49

Well, TECD certainly can't be accused of being a slow mover.
Last week the stock displayed a bullish trend of steady gains as it
filled in the large February 7th gap.  Profit-taking on Monday
and Tuesday morning erased some of those gains and briefly took
TECD below $21.00.  But with the NASDAQ rallying sharply during
the second half of today's session, the bulls would not be
denied.  Shares went vertical with about two hours remaining and
finished with a 1.4% gain.  Suddenly the stock is within striking
distance of its relative high at $22.33.  In our most recent
update we said that some profit taking could be expected to
consolidate last week's gains.  Now that this has occurred, we
feel that TECD will be able to continue towards our upside target
at $23.99.  As far as new entries are concerned, aggressive
short-term traders might want to watch for a move above $22.33.
Our stop is set at $20.49.  Those looking for less risk could use
a stop just under today's low of $20.95.

Picked on February 18th at $21.75
Results since picked:       +0.22
Earnings Date            03/17/03 (unconfirmed)




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

Allied Waste - AW - close: 7.93 change: -0.07 stop: 9.03

As with most stocks, AW experienced a strong rebound from its
intraday lows during today's session.  Heavy selling this morning
brought the stock to a new multi-month low of $7.65.  This came
on the heels of a strong decline yesterday that resulted in a
test of whole-number support at $8.00.  That downward move
prompted us last night to inch our stop-loss down to $9.03, a few
cents above the descending 200-dma.  So could today's rebound
lead to a more prolonged short-covering rally?  At this point we
certainly wouldn't be surprised to see some additional gains.  AW
has posted a loss for six consecutive sessions.  Nothing goes
down in a straight line, and some bears might be eager to cover
their short positions if the broader market extends today's
gains.  If this occurs, we'll be watching for the stock to find
at $8.50-$8.60, which looks like resistance on the 30-minute
chart.  A failed rally at this level might give some traders a
chance to initiate new short positions.  Under a best-case
scenario, AW would remain under $8.00 and continue towards our
profit-target at $7.06.  The stock has been channeling lower over
the past two weeks (take another look at the 30-minute chart) and
has not yet broken out of that trend.

Picked on February 20th at $8.54
Results since picked:      +0.61
Earnings Date           02/13/03 (confirmed)




---

1-800 Contacts - CTAC - cls: 17.89 chg: -0.41 stop: 20.01 *new*

The bears got a much-needed breather late last week when CTAC
rebounded from its rising 100-dma.  Unfortunately for
shareholders, the stock was not able to build on those gains.  On
Monday CTAC retraced a large chunk of Friday's intraday bounce
and traded an Inside Day.  That consolidation pattern was broken
to the downside today when shares headed lower after the opening
bell.  Interestingly, the 5-minute chart shows that CTAC actually
sold off sharply during the final hour of trading.  This sharply
contrasted the action in the Dow Jones, which posted some rapid
late-session gains before finishing in the green.  The strong
volume behind CTAC's 2.2% decline bodes well for a continuation
of the current downtrend.  Aggressive short-term traders may want
to watch for a move below today's low ($17.60) to yield an action
point.  New entries could also be targeted on a failed rally at
$18.40 or $18.60.  Also note that we've lowered our stop by one
dollar, to $20.01.

Picked on February 20th at $18.80
Results since picked:       +0.91
Earnings Date            02/18/03 (confirmed)




---

IDEC Pharma. - IDPH - cls: 29.51 chg: +0.41 stop: 31.38

IDPH moved to a new relative low on Tuesday and proceeded to
bounce back into positive territory on the strongest volume in
over a month.  The intraday rebound mirrored a similar move in
the BTK.X biotech index, which set its own multi-month low before
bouncing from the 310 level.  This sort of action will certainly
keep the bears on their furry toes...but it's less clear whether
today's reversal is indicative of a short-term bottom in IDPH.
The stock has been marching steadily lower, with a descending
trend of lower highs providing resistance.  This trendline
coincides with whole-number resistance at $30.00.  Thus, we'll be
looking for that level to keep a lid on any additional gains.  A
rollover from $30.00 might also give aggressive speculative
traders a chance to open new bearish positions.  Our stop is
currently set at $31.38.  Those looking for a little less upside
risk could use a stop just above the descending 21-dma at $30.73.
In the news this afternoon, IDEC announced a patent infringement
suit against Corixa and GlaxoSmithKline related to Bexxar,
Corixa's non-Hodgkin's lymphoma treatment.  This did not appear
to have any substantial impact on the stock's trading.

Picked on February 13th at $29.99
Results since picked:       +0.48
Earnings Date            01/30/03 (confirmed)





===============
HR Closed Plays
===============

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

Cytyc Corp. - CYTC - close: 12.58 change: +0.35 stop: 12.12

Congratulations are in order for traders who elected to give CYTC
a bit more room to move with a stop just below $12.00.  This
level of previous resistance acted as support on Tuesday morning
as shares followed the broader market deep into negative
territory.  Our play was stopped out when Cytyc reached our
break-even stop at $12.12.  Following the early-morning test of
support, buyers eagerly moved in through the rest of the session.
CYTC ultimately tacked on 2.8% and closed just above Monday's
intraday resistance at $12.50.  We'd expect shares to extend
these gains and rally towards the $13.00 mark if the broader
market sees more buying on Wednesday.  The successful test of
$12.00 is a positive technical development.  Bulls can also be
encouraged by the fact that CYTC bounced near its rising 21-dma
at $12.04.  But with the daily stochastics (5,3,3) heading lower
and the MACD displaying what looks like a bearish crossover,
shareholders aren't out of the woods just yet.  Traders who are
still long can maintain a stop-loss just below $12.00.  We'd be
looking to take gains off the table if CYTC experienced another
rollover near $13.00.  A move above the relative high ($13.13),
on the other hand, would clear the way for a possible rally to
the $14-$15 region.

Picked on February 11th at $12.12
Results since picked:       +0.00
Earnings Date            01/28/03 (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

UIL     UIL Holdings Corp          32.81     +1.01

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

APSG    Applied Signal Tech.       13.48     +1.18
ACI     Arch Coal                  19.34     +1.04

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

OMC     Omnicom Group              57.35     +3.35
HRB     H&R Block                  38.51     +1.31
SSP     EW Scripps                 80.51     +1.35
KBH     KB Home                    48.55     +1.30
FCN     FTI Consulting             44.30     +1.37
ZMH     Zimmer Holdings            44.90     +1.23
DGX     Quest Diagnostics          53.45     +1.50

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

MRX     Medicis Pharmaceutical     45.76     -1.23
FTE     France Telecom             21.00     -1.49
DB      Deutsche Bank              39.65     -1.01
BTY     British Telecom            25.29     -1.12

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

FOX     Fox Entertainment          26.16     -0.65
BNK     Banknorth Group            22.50     -0.31




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