Option Investor

Daily Newsletter, Tuesday, 03/11/2003

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PremierInvestor.net Newsletter                 Tuesday 03-11-2003
                                                   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:      Volume Returns
Market Sentiment: Fulfillment
Play-of-the-Day:  Brokerage Breakdown

U.S. Market Numbers
MARKET WRAP  (view in courier font for table alignment)
      03-11-2003           High     Low     Volume Advance/Decline
DJIA     7524.06 - 44.10  7642.41  7520.63 1.69 bln   1317/1881
NASDAQ   1271.47 -  6.90  1288.99  1269.90 1.24 bln   1453/1773
S&P 100   406.74 -  2.90   413.63   406.70   Totals   2770/3655
S&P 500   800.73 -  6.75   814.25   800.30
W5000    7610.47 - 61.80  7730.09  7605.42
RUS 2000  347.03 -  0.98   350.77   346.44
DJ TRANS 1942.19 - 40.40  1986.34  1941.50
VIX        38.08 +  0.23    38.39    36.87
VXN        47.43 +  0.40    47.98    46.83
Total Volume 3,117M
Total UpVol    903M
Total DnVol  2,092M
52wk Highs  149
52wk Lows   511
TRIN       1.77
PUT/CALL    .81

Market Wrap

Volume Returns

Unfortunately it was down volume. Tuesday was not nearly as
bad as Monday but still the down volume beat up volume better
than 2:1. There was no panic selling. Traders could have best
described it as frustration selling. Frustration that the war
just keeps getting farther away and economy just keeps getting

Dow Chart - Daily

Nasdaq Chart - Daily

Yesterday was the third anniversary of the Nasdaq high of
5132 three years ago and today the Dow, Nasdaq, S&P, OEX,
TRAN and RUT all closed at lows for this year. There was
no panic selling but the consensus of opinion was "I am
an investor, get me out of here". When it appeared the war
was going to begin around the 17th investors had arranged
their positions to take advantage of any post war rally.
They were gulping down antacids as the market continued
to drift lower but confident it would all be over soon.
Today the shift in the potential starting date to April
prompted those same investors started calling it quits.
There maximum pain threshold had been reached and they do
not want to try and hold on for 3-4 more weeks. Support
for the US position continues to erode despite further
evidence of lies and weapons from Iraq.

Helping investors decide stocks were not appealing in a
falling economy was the Wholesale Inventory report. Sales
rebounded slightly but inventories fell -0.2% and pushed
the inventory to sales ratio back to record lows. Nobody
is buying anything on speculation and businesses are
keeping expensive inventory to a minimum. Even worse
was the report from the Richmond Fed showing the top-line
shipments index falling from 18 to zero and new orders
falling from 26 to -16. The backlog of orders fell from
46 to 26. This is not a positive report in any fashion.
Cost pressures, energy prices, excess capacity and lack
of demand is still creating the perfect storm for
manufacturers. Chain store sales posted their strongest
gain in six weeks but it was still less than 1% and
disappointing to analysts. Sales are expected to be flat
for all of March compared to only a +0.8% gain for all
of February. Consumers are obviously not supporting the
economy at retail stores. At least we can count on auto
and home sales. Oops! Sorry, those are down too!

The Transportation index sank to a new seven year low at
1941. This is due to constant pressure from oil prices
and lack of demand for air travel. Shippers are also
suffering from lack of traffic and higher costs. UAL
requested another six months to complete their
reorganization plan and rumors are rampant that they
could change it from Chapter 11 to Chapter 7 which is
liquidation not reorganization. AMR is looking for post
bankruptcy financing and their days until a filing are
numbered. Boeing announced that airplane shipments in
February dropped -33% and Gulfstream dropped its
delivery targets by -9%. Boeing said this will be the
slowest year since 1996. Only four Boeing jets were
delivered to US carriers. The Air Transport Association
said economic fallout from a war could be so severe that
"There is serious risk of chaotic industry bankruptcies
and liquidations and forced nationalization of airlines
was a real possibility."

The US markets are not the only markets suffering from
war fears and a weakening global economy. The Nikkei
fell to another 20-year low at 7862. The FTSE and the
German Dax hit a 7-year low. These are just a few. The
world markets are bleeding cash and that means the US
markets are at risk. If you are a large foreign investor
with cash in multiple markets you have a major cash
management problem. If your home market is hitting
multi year lows then you may need cash to support
those positions or add to them if you expect a rebound
soon. With the US dollar dropping you are at double risk
with your US investments. Market risk and currency risk.
It does not take a rocket scientist to realize that
drawing cash out of US stocks makes sense. This foreign
cash drain is just one leak in our financial dike.

The current market technicals in the US stink. That is
as blunt as I can make it. With everything but the Nasdaq
setting lows for the year and the $TRAN confirming the
Dow drop there is little doubt that we could see the
October lows soon. Unfortunately there is growing
belief that those lows will not hold. If you are an
institutional investor realizing that the war could
still be a month away and earnings warning season begins
in earnest next week and 54% of the S&P has ALREADY warned
for the 1Q then suddenly cash as an investment vehicle
looks great.

The realization is dawning on many investors that it
is the economy, not the war that is dragging the market
down. Any still hoping for a war rally are becoming
increasingly frustrated by the delays and the start
date receding in the distance. If it is the war then
we have another month to wait. If it is the economy
then we are already in deeper trouble than most thought.
Every major sector is full of warnings. Today we got
ANN, MYG, NOK, BBOX, LECO, TSG, X, FLSH and Volkswagen
among others. The warning from NOK was the 5th quarter
in a row and cell phones are one of the growth sectors.
NOK said volume was up but revenue was down due to
strong price cutting to move units. If you don't give
them away nobody wants them.

Adding to the gloom and doom is the worry in the insurance
sector after Warren Buffett warned that a major reinsurer
had stopped paying claims that totaled in the billions
of dollars. The entire insurance sector is suffering
from the potential for hundreds of millions of dollars
in write offs if the company fails. AIG and CB have
been hit especially hard but the entire sector is weak.
Buffett did not identify the company in question.

Tbills hit a low not seen since 1958 and bond yields
continued lower as cash continues to flow into safe
investments despite the low returns. The financial
markets are still reeling from multiple warnings of
a potential financial meltdown from a bursting housing
bubble. After Poole attacked FNM/FRE yesterday there
were several follow on comments about the extremely
high risk due to inflated housing values from the
current bubble. Both stocks rallied after FNM CEO
Franklin Raines rebutted Poole's comments but they
rolled over again Tuesday afternoon. There were
multiple downgrades to the entities based on a
perceived tightening of control by the administration
or a potential ending of their GSE status.

The volume has picked up substantially but cannot be
considered panic sales yet. On Monday we saw a 90%
downside day where down volume was 18 times up volume.
According to market historians this is a real sign
of a market bottom in progress. Unfortunately for the
last 70 years it has taken an average of six 90% down
days to produce a bottom. This usually occurs over
a 30-60 day period. One down and five to go if we
are in an average bear market.

Barton Biggs called the bottom again while saying that
fear, pain, despair and capitulation are all present
but that the US markets were only "fairly" valued. He
feels that massive short covering by hedge funds and
market entry by mutual funds could appear at any time
if they feel the bottom is near. Barton has been
saying that this "bottom building process", which is
analyst speak for I am hedging my bets and we could
still see lower lows, has been underway since late

Dow Chart - Weekly

There are as many guesses for the bottom as there are
investors and I am not going to pick a number. Everyone
thinks Dow 7200 is the magic number because it is the
October low and every other "support level" since then
has failed. For those counting there has been seven
"lower lows" since 1999 for the Dow. October lows have
been Oct-99 9976, Oct-00 9656, Sep-01 8062, Oct-02 7197.
We will call the Sept-2001 low an October low since we
were headed there already before the attack. Why is the
Oct-2002 low of 7197 any more of a milestone than any
of the other seven lows in this bear market? The only
reason is that optimism runs rampant in the bulls. The
economy is as bad or worse today than it was at any
time over the last three years. I would agree that the
7200 level would and will be key, especially if the
economy was showing signs of a recovery. What little
signs we saw in Jan/Feb have almost completely
evaporated and current analysts have to look at economic
reports with a microscope to find any positives.

We also have the war and the potential impact on the
economy. There is a serious risk of escalated terrorist
attacks once the war starts and the risk that tens of
thousands of troops come home with chemical/biological
injuries or come home in body bags. We have the risk of
negative American sentiment if we go to war alone and
in defiance of the UN. Unfortunately that appears to be
the current outlook. Late news tonight is that President
Bush is preparing a final demand to Saddam to disarm
within seven to ten days or be attacked and that demand
will be delivered on prime time TV on Thursday night.
In effect a declaration of war because we know Saddam
is not going to disarm. This is to be given after a
vote scheduled on Thursday at the UN. Ironically this
may provide some hope to the bulls due to the shorter
time frame but that hope is misplaced for longer term
investors due to the topics discussed above. There are
rumors now that the 42,000 British troops already in
Kuwait will not now fight. The 60,000 American troops
called up last week and currently in route to Kuwait
are a replacement for the British troops. This shows
that it is going to be an American show and even our
staunchest allies are in trouble.

After all the negative points above there is a possibility
for a market rebound due to purely technical conditions.
Stocks have fallen far and bonds are at their highs.
This means most fund portfolios with weighted ratios
are now out of balance. Eventually they will have to
adjust those asset allocations from bonds to stocks
while knowing that there is still a rocky road ahead.
Philosophically selling bonds at five year highs and buying
stocks at five year lows does not take a lot of technical
justification. The problem as you can obviously see is
timing. If the market is still perceived to be going
lower and bonds are continuing to inch slightly higher
then they can wait to pull the trigger until the last
possible minute. That minute would be Dow 7200 to some
but probably the start of the war to others. Either way,
regardless of whether 7200 is the bottom the odds are
good we will see some asset allocation when we hit that

It all boils down to long-term risk versus short
term risk. It is my opinion that this will power any
rebound over the next couple weeks and NOT a belief
that stocks are suddenly a good value. Our challenge
is to not be caught off guard when this process starts.
Typically a sharp dip at the end of several days of
drops is the key trigger for the event. Nobody wants
to wait until the last minute and nobody wants to be
last to board the train. Unfortunately while everybody
is looking for the signal it still catches many by
surprise as it occurs when the gloom and doom is the
strongest. Last October we saw a +1350 point jump in
eight days while most traders were still waiting for
the next dip. Since very tense and irritable fund
managers tend to jump the gun to avoid being late we
need to be continually alert to every bounce. It should
not be hard to spot. It will be the one with real

Enter Very Passively, Exit Very Aggressively!

Jim Brown

Market Sentiment

by Steven Price

The bulls huffed and puffed and snorted a little, following more
news on the geo-political front that seemed to favor yet another
delay in a U.S. invasion of Iraq. Pakistan's decision to abstain
from the U.N. vote and the apparent softening of the U.S. March
17 deadline led to a morning rally right up to intraday
resistance from Monday just below Dow 7650. From there it was the
bears' turn, as they stepped in and slammed the market for 100
points in the opposite direction.

Just when it looked like we were going to take out last July's
low of 7532 and head toward a re-test of the October lows around
7200, the bulls stepped back in to defend that July level.  For
those following the pivot analysis we've been using in our swing
trade and index trade models, the support at the daily and weekly
S1s also coincided with that July low.  The weekly S1 of 7541 was
the closest support level to the morning bounce off 7540.73 and
suggests a confluence of support factors. Of course the afternoon
rollover below those levels is important as well.  The weekly S2
sits at 7342. Another of those factors is the head and shoulders
pattern that we have seen form across the broader market indices.
The Dow in particular is what I am looking at today, as it was
the index that behaved most closely according to script over the
summer and fall of 2002.  Between July and September, the Dow
formed a bearish head and shoulders pattern that carried with it
a downside objective just below 7200 (7180-7190).  When it broke
its neckline around 8250 in September, it was pretty much a
straight shot down to a low of 7197 on October 10.  Once that
level was achieved, the next move we saw was a powerful rally all
the way up to 9000.  It did pause along the way, finding
resistance at 8800, but by the end of the rally, we had seen a
gain of 1800 points.

That resistance at 8800 was important in that it was the
beginning of another head and shoulders pattern.  The pause at
8800 and then pullback to 8300 formed a new left shoulder, with a
subsequent head at 9043.  After yet another pullback to 8300, the
right shoulder was formed on the subsequent rally to 8869.  I can
label this a definitive head and shoulders pattern because we
then rolled over and broke a neckline at 8200. I've posted this
chart in the Swing Trade Wrap for those readers who would like to
see it. The key to any useful H&S pattern is targeting the move
that results from the neckline break. In this case, the objective
of the pattern was right around Dow 7500.  Our closing low of
7524 was awfully close to achieving this objective and the bounce
from this level, as well as the above referenced S1s ought to be
a sign that the bulls are putting up a fight in this region.

Also note the point and figure bearish vertical count on the Dow
of 7100 is down near the October low.  The objective in the OEX
is 390.  The Dow Diamonds, however, have a bearish count of 75
and that would correlate to a Dow trade of 7500, as well.

Back in October, it seemed the sky was falling and there was no
real reason to go long.  However, we rallied 26% in the Dow and
those traders looking to pick a rally top to short along the way
took an awful lot of pain. At that time, we also saw similarly
extended bullish percents, which had fallen dramatically from
August highs. Those bullish percents in the Dow, OEX and SPX are
not yet as low as they were in October, however, they are getting
close and all have entered oversold territory.  The October drop
also did not see bullish percents as low as they were in July,
although the markets actually dropped further.  What's more, the
October-November rally came during an earnings period in which we
got repeated warnings from the tech sector and companies that
consistently missed forecasts.

I am not trying to say that any trader should be going long at
these levels. However, those traders who can't see any reason not
to go short need to be aware of the technical factors that could
pose some barriers as the prospect of war grows closer.  How does
the war figure into all of this?  It is really anyone's guess.
Many traders are expecting a big rally once the bullets start
flying, much like we saw in 1991. However, at that time, the
speed of victory was not necessarily known.  This time we are
expecting a short war and yet the market is still dropping.  We
may continue that drop right through the H&S objective and with
no obvious reasons to buy the current levels, bears may yet get a
test of the October lows.  However, the snap back rallies have
had legs and those traders still getting in short (or maintaining
short positions) should be giving extra thought to their risk
profiles and where they want to place their stops.

We did not get a big turnaround rally off the H&S objective test,
like we did in October, but we have not quite achieved that
objective, either.  Back in October, the SPX and OEX did not
achieve their objectives, even though the Dow did. We are in a
similar position now, with the Dow very close, but the OEX
objective sitting just below 400 and the SPX sitting around 790.
That's not to say they aren't close, just not as close as the
Dow.  Traders will want to put these levels on their radars and
tighten their stops as we get close.  Some bounce can be
expected, so a small one will not necessarily signal a major
reversal.  However, if that bounce starts to get some legs and we
see an upturn in the bullish percents, it may be time to readjust
our thinking, just as we should have in October. It is hard to
make a case against shorts, with the weakness of today's bounce,
in relation to the recent slide.  However, I felt that way in
July and October, as well. The trend is still down, I am just
raising the risk alert for bears from yellow to orange.

Market Averages


52-week High: 10673
52-week Low :  7197
Current     :  7524

Moving Averages:

 10-dma: 7741
 50-dma: 8144
200-dma: 8512

S&P 500 ($SPX)

52-week High: 1176
52-week Low :  768
Current     :  800

Moving Averages:

 10-dma:  825
 50-dma:  862
200-dma:  901

Nasdaq-100 ($NDX)

52-week High: 1734
52-week Low :  795
Current     :  959

Moving Averages:

 10-dma:  984
 50-dma: 1006
200-dma: 1000

S&P Banks Index (BIX): The BIX and BKX have been in free fall
mode, taking both regional and international banks down with
them.  The indices have both broken down below February lows and
could see as much as a 10% decline from these levels before
testing support at the October lows. It will be hard to get any
type of market bounce without the financials participation and
right now those financials show little signs of a bounce for some
time. Watch this sector closely, as heavyweights BAC, C, JPM, and
CMA have all dropped hard and are approaching vacuums of support.
The broker dealers, represented by the XBD, are also falling
fast, with GS, MWD, LEH, MER and BSC all heading lower.  Shorts
looking to get involved here can put any of these on their radar
and see a similar chart, but some are more broken down than
others.  Look for those that have already given up February lows
as the best short candidates.

52-week High: 331
52-week Low : 236
Current:      258

Moving Averages:

 21-dma: 271
 50-dma: 278

The VIX rose only slightly today, and is slowing its ascent as we
near 40%.  That key level has signaled short-term bounces, with
highs between 40 and 41, but never a close above 40%. At least
not since October, when we were rebounding from multi-year lows
in the Dow/SPX/OEX. If we do manage a close above 41%, it may
signal further weakness, as institutions will not have taken
advantage of those elevated levels to sell premium and collect
time decay.

CBOE Market Volatility Index (VIX) = 38.08 +0.23
Nasdaq-100 Volatility Index  (VXN) = 47.53 +0.50

          Put/Call Ratio  Call Volume   Put Volume

Total          0.81        444,918       360,712
Equity Only    0.66        294,904       193,392
OEX            1.00         25,615        25,680
QQQ            1.45         18,759        27,233

Bullish Percent Data

           Current   Change   Status
NYSE          36.6    - 1     Bull Correction
NASDAQ-100    31.0    - 2     Bear Confirmed
Dow Indust.   10.0    - 3     Bear Confirmed
S&P 500       28.8    - 2     Bull Correction
S&P 100       23.0    - 3     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  2.07
10-Day Arms Index  1.86
21-Day Arms Index  1.52
55-Day Arms Index  1.43

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

Market Internals

        Advancers     Decliners
NYSE       1115          1720
NASDAQ     1391          1679

        New Highs      New Lows
NYSE        62              215
NASDAQ      36              101

        Volume (in millions)
NYSE       1,657
NASDAQ     1,212

Commitments Of Traders Report: 03/04/03

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 <http://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

S&P 500

We hear about trading volumes falling but now we're seeing it
in the institutional futures positions as well.  Commercial
traders remain net short, expecting the market to go down.
Small traders are still net long and actually increased the
number of contracts on both sides of the fence.

Commercials   Long      Short      Net     % Of OI
02/11/03      412,333   472,156   (59,823)   (6.8%)
02/18/03      423,871   481,871   (58,000)   (6.4%)
02/25/03      424,276   482,476   (58,200)   (6.4%)
03/04/03      426,053   472,492   (46,439)   (5.2%)

Most bearish reading of the year: (111,956) -   3/6/02
Most bullish reading of the year: ( 16,472) - 10/01/02

Small Traders Long      Short      Net     % of OI
02/11/03      161,126    95,618    65,508     25.5%
02/18/03      155,475    91,102    64,373     26.1%
02/25/03      157,790    91,083    66,707     26.8%
03/04/03      164,759    98,636    66,123     25.1%

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


The professional traders in the NDX futures are just trading
water.  There is little difference from the week before.
Meanwhile the individual trader has bumped up the number
of short contracts but remains net long.

Commercials   Long      Short      Net     % of OI
02/11/03       39,412     53,818   (14,406) (15.5%)
02/18/03       38,486     50,501   (12,015) (13.5%)
02/25/03       38,787     51,745   (12,958) (14.3%)
03/04/03       39,934     52,978   (13,044) (14.0%)

Most bearish reading of the year: (15,521) -  3/13/02
Most bullish reading of the year:   9,068  - 06/11/02

Small Traders  Long     Short      Net     % of OI
02/11/03       29,667     8,915    20,752    53.8%
02/18/03       25,482     9,425    16,057    46.0%
02/25/03       25,378     7,431    17,947    54.7%
03/04/03       24,240     8,038    16,202    50.2%

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


Looks like interest has been picking up for the DJ futures.
Commercials upped both the long and short sides of the contracts
but remain net long (expecting the Industrials to go up).
The small trader slid a bit more to the bullish camp but
remains net short overall.

Commercials   Long      Short      Net     % of OI
02/11/03       19,826    11,800    8,026      25.4%
02/18/03       18,812    11,939    6,873      22.4%
02/25/03       19,985    11,866    8,119      25.5%
03/04/03       21,326    12,724    8,602      25.3%

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
02/11/03        5,390     9,300    (3,910)   (26.6%)
02/18/03        5,561     8,973    (3,412)   (23.5%)
02/25/03        4,872     8,723    (3,851)   (28.3%)
03/04/03        5,233     8,075    (2,842)   (21.4%)

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

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

Morgan Stanley - MWD - close: 34.32 change: -1.06 stop: *text*

Company Description:
Morgan Stanley is a global financial services firm and a market
leader in securities, asset management and credit services. With
more than 700 offices in 28 countries, Morgan Stanley connects
people, ideas and capital to help clients achieve their financial
aspirations. (source: company press release)

Why We Like It:
With the Dow Jones and S&P 500 both trading at multi-month lows
and the U.S. Dollar sinking to levels not seen since 1999, it's
not surprising to see widespread weakness in the financial
sector.  Both the BIX.X banking index (which represents domestic
banks) and the BKX.X banking index (a gauge of the larger money-
center banks such as C and JPM) are leading the charge lower.
The XBD.X broker/dealer index is looking quite weak as well,
having recently fallen below support at 360.  The next area of
historical support is at 320.

All this sector weakness hasn't been very healthy for shares of
Morgan Stanley.  The stock is trading at new relative lows after
succumbing to heavy selling pressure over the past two days.  MWD
displayed relative weakness today with a loss of almost 3%.  This
decline led to a violation of bullish support on the point-and-
figure chart.  Further evidence of technical weakness can be
garnered from the MACD, which is on the verge of giving a bearish
crossover.  The previous two bearish crossovers in early-December
and mid-January occurred shortly after the stock put in a multi-
week high.  What's even more disconcerting for shareholders is
the fact that MWD has fallen into a fast-move region with no
clear bar chart support until the October lows near $29.00.  Our
initial profit target will be set at $30.06, just above the
psychologically-important $30.00 level.  We've started this paper
trade with an entry trigger at $34.19, a penny under today's low.
If the play is activated our stop will be placed at $36.51.  This
will force MWD to move above both the 21-dma ($36.09) and
Monday's high of $36.49.  Those who are a bit more aggressive
could use a stop just above Friday's high of $37.05.  On a final
note, Morgan Stanley announces earnings before the opening bell
on March 20th.  Because we'll probably be closing the play before
the announcement, our timeframe is somewhat limited.  Longer-term
traders looking for another weak financial stock might want to
check out BAC or CMA.

Annotated chart - MWD

Picked on March xxth at $xx.xx
Results since picked:    +0.00
Earnings Date         04/20/03 (confirmed)

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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:


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Copyright ) 2003  PremierInvestor.net. and
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Do not duplicate or redistribute in any form.
PremierInvestor.net Newsletter                  Tuesday 03-18-2003
                                                    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
  Closed Bearish Plays:  INFY

Stock Bottom / Active Trader
  New Bullish Plays:     BBY
  Bullish Play Updates:  TBL, TOO
  Bearish Play Updates:  T
  Closed Bearish Plays:  S, UHS

High Risk/Reward
  New Bullish Plays:     BBOX
  Closed Bearish Plays:  CTAC

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 Closed Plays

  Closed Bearish Plays

Infosys Technologies - INFY - cls: 58.52 chg: -0.15 stop: 60.01

Last week we discussed how the dissipation of bullish momentum in
the software index and sector leader MSFT had helped to keep INFY
under resistance at $60.00.  The bears put up a valiant defense
of that level on Monday as the GSO.X and overall tech sector
moved explosively higher.  INFY tagged an intraday high of
$60.00, leaving our short play hanging by a thread.  This morning
the stock gapped up to an opening price of $60.19, stopping our
play out for a loss of 70 cents, or 1.1%.  In light of the
powerful market rally from last weeks lows, it wasn't surprising
to see INFY move sharply higher.  Another factor that helped fuel
the stock's rise is the recent uptrend in the U.S. Dollar.  The
currency has been pushed higher by the equity rally and a growing
belief that the pending war with Iraq will be quickly resolved.
The corresponding weakness in the Indian rupee is a positive
development for Infosys.  On the daily chart, we see that INFY is
approaching its 200-dma at $62.27.  That moving average provided
resistance in late-February/early-March.  Longer-term traders may
want to maintain a stop just above those highs at $62.44.

Picked on March 5th at $59.49
Results since picked:   -0.70
Earnings Date        04/11/03 (unconfirmed)

Stock Bottom / Active Trader (AT) section

AT New Plays

  New Bullish Plays

Best Buy Co - BBY - close: 30.50 change: +0.63 stop: 26.99

Company Description:
Minneapolis-based Best Buy Co., Inc. is North America's leading
specialty retailer of consumer electronics, personal computers,
entertainment software and appliances. The Company operates
retail stores and/or web sites under the names: Best Buy
(BestBuy.com), Future Shop (FutureShop.ca), Magnolia Hi-Fi
(MagnoliaHiFi.com), Geek Squad (GeekSquad.com), Media Play
(MediaPlay.com), Sam Goody (SamGoody.com) and Suncoast
(Suncoast.com). The Company reaches consumers through nearly
1,900 retail stores in the United States, Canada, Puerto Rico and
the U.S. Virgin Islands. (source: company press release)

Why we like it:
Some of our readers are probably scratching their heads that
we're considering another retail stock for a bullish long play.
Believe us, we had the same reaction at least initially.  There
is no arguing that the economic stability of this country is on
shaky ground and the retailing sector has NOT been a leader
recently.  With so many signs pointing to a potential double-dip
recession how does one build a case for bullish retailers?  The
short answer would be "carefully".  Not all retailers are on
equal footing and both investors and traders need to be choosy.

Let's try and look at the story for Best Buy.  The company is
expected to announce full year earnings on April 1st, 2003.  BBY
management has affirmed that they will hit analyst estimates and
actually guided toward the upper half of the range.  BBY's Q4
revenue numbers were 9% higher than the year before and total
revenue for the year appears to be up 16% to $22.71 billion.  As
the number one retailer of consumer electronics, industry
watchers expect BBY to continue to take market share from its
closest rival Circuit City, who is still struggling to remodel
its stores.  Bears will be quick to point out that all is not
pretty at BBY.  The company's Musicland operations have been
bleeding money, which is no doubt due to the malaise affecting
the entire music industry.  However, BBY is restructuring its
Musicland operations and closing some stores.

So the domestic economy is stumbling along and BBY still manages
to raise its revenue numbers?  There are plenty of other
retailers who would like to say the same but can't.  We also
found it very interesting that the Oracle of Omaha, Warren
Buffett, appears to have taken a liking to BBY.  Recent research
into the top 35 stock holdings of Berkshire Hathwaway showed that
the company bought additional shares in seven of its top 35
stocks positions during the fourth quarter of 2002.  High on the
list was BBY.  Now Buffett won't tell the media why he likes BBY
but one reporter speculated that the Oracle certainly doesn't
mind BBY's low P/E.  Historically, shares of BBY tend to trade
between a P/E of 20 and 40 times earnings.  Currently they are
only trading at 14 times estimated 2003 earnings (source:
Forbes.com).  That definitely leaves room for upside price
appreciation, especially if you have a longer-term perspective
like Warren.

We also noticed some very bullish developments on BBY's point-
and-figure chart.  Not only did BBY breakout above descending
bearish resistance but the stock is also in breakout mode from a
bullish triangle.  Now here's the skinny on those bullish
triangle breakouts for PnF charts.  According to studies, a
bullish triangle PnF breakout is profitable 71.4% of the time.
Not only that, the stock in question has an average gain of 30.9%
over the next 5.4 months.  Here's the trick - these results only
apply in a bull market.  It would take a lot of faith and a whole
lot of guts to call today's markets a new bull market.  Also
positive for PnF chart readers is the stock's bullish vertical
count, which is currently pointing to a price target of $60
(again, this is probably a long-term target).

On a much shorter-term time frame bulls should be encouraged by
the breakout above the $30 level on rising volume.  However, we
feel that the best entry point is probably on a pull back to the
$29.00 area.  This is why we're going to initiate the play with
such a wide stop loss (of $26.99).  A pull back and bounce
anywhere between $28 and $29 would allow traders a much smaller
amount of exposure.  Our short-term target is $35.00 with a two-
to-four week time frame.

Annotated Chart of BBY:

Picked on March 18th at $30.50
Gain since picked:       +0.00
Earnings Date         04/01/03 (unconfirmed)

AT Play Updates

  Bullish Play Updates

Timberland Co. - TBL - close: 41.35 change: -0.43 stop: 38.74

News continues to be scarce for TBL but that has not stopped the
stock from enjoying the bullish atmosphere in the markets.  When
the broader indices soared on Monday, shares of TBL joined in the
rally and headed higher.  That is until they slammed smack dab
into resistance at $42.00.  The stock spent most of the session
trading sideways between 41.80 and 42.00 before slipping back
from its highs into the close.  TBL saw some profit taking early
in Tuesday's session but buyers bought the dip and by the
afternoon the stock was ticking higher again.  Very conservative
traders could use today's low as a potential stop loss guide
while potentially less but still conservative traders could use
the $40 mark as a guide.  Currently, we're going to keep our stop
loss at 38.74.  Remember, this is a short-term trade with our
target near $45.  The longer-term weekly patterns are showing TBL
to be overbought and ready for a pull back.

Picked on March 14th at $40.81
Results since picked:    +0.54
Earnings Date         04/17/03 (unconfirmed)


TOO Inc - TOO - close: 17.21 change: +0.01 stop: 16.94

Our bottom fishing retail play in TOO has been a real trooper
lately.  The stock has taken every opportunity to rally with the
markets and today's show of strength by not pulling back was very
encouraging for shareholders.  After Monday's big day we
seriously considered closing the stock play for a profit.  Yet
after seeing the broader markets closing performances we decided
to give TOO more time but using a very tight stop loss.  That new
stop loss from Monday night is $16.94.  This protects a decent
gain (even more decent if you entered on the pull back near
$14.50) while still allowing TOO a chance to run.  The stock is
up significantly in the last four sessions and we would not
recommend new positions unless the stock offered a pull back an
bounced.  Of course this will stop out our current play.  Keep in
mind that the S&P Retail index is looking just as top heavy and
approaching its 200-dma.  What could keep this rally going is
shares of WMT, the leader in the retail group.  WMT managed to
close above both its $52 level and its 200-dma.  WMT looks just
as top heavy and due for a pull back but if the stock keeps
running it can power the retail group to new highs.  TOO is
likely to keep the pace.  Again, we do not recommend any new
positions at this time and traders should be considering when
they plan to exit if they are not already taking some profits off
the table.

Picked on February 27th at $15.66
Gain since picked:          +1.55
Earnings Date            02/19/03 (confirmed)

  Bearish Play Updates

AT&T - T - close: 17.15 change: -0.08 stop: *text*

Shares of T bounced sharply on Monday.  Did the business outlook
for AT&T suddenly improve?  Not a chance!  But with the Dow
Industrials rallying more than 280 points, nearly every component
of the index posted solid gains.  Yesterday's short-covering
erased most of last week's losses.  The stock traded in a much
smaller range during today's session and finished with a
fractional decline.  News from Sprint this morning underscored
the intense telecom competition that has pressured T.  FON
announced that it plans to begin selling local phone service with
wireless and long-distance calling.  These sorts of developments
will make it increasingly difficult for AT&T to turn a profit.
As far as the technical outlook is concerned, we're not quite
convinced by the bounce off the relative lows.  Until the stock
shows additional confirmation, we'll maintain an entry trigger at
$15.74.  Remember that the play won't be activated if shares gap
below $15.50.  If these requirements are met our stop will be
placed at $17.16.  In other recent news, AT&T announced a
quarterly divided on Monday morning.  The dividend of $0.1875 per
share will be payable on May 1st to shareholders of record on
March 31st.

Picked on March xxth at $xx.xx
Results since picked:    +0.00
Earnings Date         04/24/03 (unconfirmed)

AT Closed Plays

  Closed Bearish Plays

Sears Roebuck - S - close: 20.52 change: +0.65 stop: 20.62

The current market rally began last Wednesday when all three
major indexes bottomed out at relative lows.  Sears, however,
didn't initially show much of a response to the equity gains.
The stock continued to languish near multi-decade lows without
showing any ability to catch a bid.  It wasn't until Monday
morning that shares finally shook off the weakness.  S saw steady
buying throughout the session and closed just below psychological
resistance at $20.00.  Driving this powerful upward move were
news announcements from the Federated and Wal-Mart camps.  FD,
the parent company of Bloomingdale's and Macy's, affirmed its
same-store sales forecast of a 3%-4% decline for March.  WMT said
it expects the same figures to show an increase in the low-single
digits.  The fact that Sears rallied sharply on its competitors
reiteration of a *decline* in sales shows just how panicky shorts
are in this environment.  It's hard to imagine that that news
would've triggered heavy buying a week ago, when the market was
still mired in bearishness.  But rally it did, and our play was
stopped out for a 6.4% loss this morning when shares extended
yesterday's uptrend.  Traders who used a more lenient stop will
be pleased to see that shares closed below the 21-dma after
failing to move above whole-number resistance at $21.00.  It's
also interesting to see that the long-term trend of lower highs
hasn't been broken.  Nonetheless, with both the MACD and daily
stochastics (5,3,3) hinting at further bullishness, traders still
holding long positions in S may want to consider heading for
exits during intraday pullbacks.

Picked on March 6th at 19.30
Results since picked   -1.32
Earnings Date       04/17/03 (unconfirmed)


Universal Health - UHS - cls: 38.45 chg: -0.14 stop: 39.06

As the saying goes, a rising tide lifts all boats.  Last week UHS
showed a rather tepid response to the ascending action of the
broader market.  The stock lifted off its short-term lows but
wasn't even able to break above its 21-dma.  That all changed on
Monday when the Dow Jones exploded for a 282-point gain.  UHS
followed the index higher throughout the session and continued to
rally on Tuesday.  Our short play was closed out for a loss of
2.8% when the stock spiked up to our stop-loss during the second
hour of trading.  Shares clawed their way to an intraday high of
$39.48 before profit-takers finally moved in late-afternoon
action.  Longer-term traders who elected to give UHS more
breathing room may want to use a stop slightly above either
today's high or psychological resistance at $40.00.

Picked on March 6th at 37.98
Results since picked   -1.08
Earnings Date       02/13/03 (confirmed)


HR New Plays

  New Bullish Plays

Black Box Corp. - BBOX - close: 30.82 change: +2.14 stop: *text*

Company Description:
Black Box is the world's largest technical services company
dedicated to designing, building and maintaining today's
complicated network infrastructure systems. Black Box services
clients through 117 offices in 132 countries throughout the
world. (source: company press release)

Why We Like It:
As Albert Einstein once pointed out, opportunity can often be
found in the midst of great difficulty.  That piece of wisdom
applies particularly well to the recent trading in BBOX.  Shares
of the networking company lost roughly a third of their value on
March 12th after Black Box reduced its fourth-quarter earnings
expectations to 53-54 cents/share.  Analysts, on average, had
been expecting an EPS result of 74 cents.  Explaining the
shortfall, BBOX said "overcapacity in just about all vertical
markets...continues to have an impact on our business."  They
also cited the continued war and terrorism concerns as reasons
for the weakness, but of course that could be said for the entire
economy in general.  Investors were not pleased with these
bearish comments regarding IT demand.  BBOX gapped from $39.14 to
$26.78 on extremely high volume of 7.5 million shares.  The stock
continued to decline and bottomed out at $25.58 during the
following session.  Things were looking awfully bleak as BBOX
fell to multi-year lows, but the bears finally decided to call it
quits when they were confronted with Thursday's broader market

Although there have been no fresh news developments for Black Box
since last week's earnings warning, bargain-hunting and short
covering have pushed BBOX sharply higher over the past two
sessions.  Obviously yesterday's market rally played a big factor
in those gains.  Shares continued to trade strong on Tuesday and
outperformed the NASDAQ with a gain of 7.4%.  That relative
strength is a positive sign for the bulls.  Point-and-figure
chartists will also note that BBOX has reversed into a column of
"X."  And while a case could be made for some consolidation of
the recent bounce from the $26.50 region, we feel the stock is
poised to continue higher as it fills in the March 12th gap.  An
entire retracement of those losses would take BBOX to the $39-$40
area.  This might be a realistic goal for longer-term traders.
Because we have a shorter-term timeframe, our objective will be
to capture a rally to our official exit target at $34.94, just
below psychological resistance.  The action trigger to enter this
play is set at $30.86.  Should we be triggered, we'll use a stop-
loss at $28.69, five cents under today's low.  Those looking for
less downside risk might want to use a stop slightly below
$29.50, which acted as a price magnet during the middle of
today's session.

Annotated daily chart - BBOX:

Picked on March xth at $xx.xx <- see text
Results since picked:   +0.00
Earnings Date        05/08/03 (unconfirmed)

HR Closed Plays

  Closed Bearish Plays

1-800 Contacts - CTAC - cls: 20.09 chg: +0.60 stop: 20.01

CTAC didn't show much of a response to yesterday's bullish
onslaught in the equity market.  The stock posted a paltry 1.4%
gain while remaining well below the relative high of $19.70.
That relative weakness gave the bears some hope that shares would
roll over and begin to retrace the recent gains.  But with the
major indexes holding firm on Tuesday, a delayed bullish reaction
propelled CTAC to a 3.0% gain.  Our 6.4% stop-loss at $20.01 was
violated when shares broke through psychological resistance near
the end of the trading day.  Given the lack of additional
overhead resistance until the declining 50-dma at $21.64, we
would not advise maintaining short positions at this time.

Picked on February 20th at $18.80
Results since picked:       -1.21
Earnings Date            02/18/03 (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

DUK     Duke Energy                15.51     +0.87
FE      First Energy               30.97     +0.67
SHPGY   Shire Pharma.              18.20     +1.25
TECD    Tech Data                  24.25     +1.27
PRX     Pharamceutical Resources   40.00     +1.20

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

DGIN    Digital Insight Corp       15.55     +1.27
URS     URS Corp                   12.14     +1.11
CELL    Brightpoint Inc            14.47     +1.26

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

DD      DuPont                     40.08     +1.38
SLB     Schlumberger Ltd           39.50     +1.42
NAB     National Australia Bank    90.25     +1.63
ABK     Ambac Financial            49.57     +1.15
ESV     Ensco Intl.                26.21     +1.24
FMX     Fomento Economico          33.80     +1.01
GRMN    Garmin Ltd                 34.92     +1.32
BCR     C.R. Bard                  61.05     +1.31
AGE     A.G. Edwards               27.52     +1.13

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

NHY     Norsk Hydro                36.10     -1.24
RJR     RJ Reynolds                33.57     -3.12
WGO     Winnebago Industries       24.45     -5.31

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


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

Please read our disclaimer at:


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Copyright ) 2003  PremierInvestor.net. and
The Premier Investor Network.
Do not duplicate or redistribute in any form.


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