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Daily Newsletter, Wednesday, 08/13/2003

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PremierInvestor.net Newsletter                Wednesday 08-13-2003
                                                    section 1 of 2
Copyright (c) 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:      Perspective

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)

=================================================================
MARKET WRAP  (view in courier font for table alignment)
=================================================================
     08-13-2003         High     Low     Volume Advance/Decline
DJIA     9271.76 – 38.30  9322.11  9233.94 1.48 bln    608/ 849
NASDAQ   1686.61 –  0.40  1695.83  1681.31 1.44 bln    738/ 677
S&P 100   495.29 -  4.45   500.95   493.55   Totals   1346/1526
S&P 500   984.03 -  6.32   992.50   980.85
RUS 2000  467.47 +  0.52   468.37   466.01
DJ TRANS 2598.88 -  8.59  2610.04  2592.52
VIX        20.62 +  0.41    21.69    20.17
VXN        30.27 +  0.06    31.24    29.79
Total Volume 3,144M
Total UpVol  1,490M
Total DnVol  1,598M
52wk Highs     367
52wk Lows       59
TRIN          0.12
PUT/CALL      0.78
=================================================================

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


Perspective
Jonathan Levinson


The indices flirted with significant upside and downside levels today,
finishing the day nearly unchanged, with the Nasdaq losing less than
one point and the Dow 38 points.


5 year weekly COMPX


Cyclically, the Dow and Nasdaq both appear to have just completed
up-phases from the March lows.  Note that on both indices, the
March bottom was a higher low on the 10 week stochastic, and the
top of the ensuing up-phase occurred at a higher high.  While
lower prices appear to be in the cards, the onus will be on the
bears for the down-phase just commencing.


5 year weekly INDU



6 month daily COMPX


The daily candles paint a picture of bifurcated markets with the
Dow vastly outperforming the Nasdaq on the correction off the
March rally's high.  The Dow is on buy signals, with the Nasdaq
on sells.

6 month daily INDU




20 day 30 minute COMPX


On the 30 minute candles, we see both indices in the early stages
of downphases within bear flag formations, projecting to lower
lows.

20 day 30 minute INDU


What does the foregoing tell us?  The bulk of the long-term
(weekly timeframe) energy of the Spring rally has been expended,
and the cycles are beginning a down-phase.  Countertrend to that
are the daily candles, which have paused in their ongoing
downphases.  The short term up-phase which caused that pause has
terminated on the 30 minute candles, with the oscillators in that
timeframe topped out and pointing south.

While the outlook appears weighted to the downside, note that
significant bounces can occur within downphases without
disturbing their course, such as we see on the daily candles.
For me, the best trades occur when the short cycles max-out
countertrend to their longer cycles before resuming their runs in
gear with the longer trend.

On the economic front, the Mortgage Bankers Association (MBA)
announced this morning that seasonally-adjusted demand for
mortgage refinancings, the MBA refi index, declined 16.1% for the
past week following the previous week's 2.4% drop.  Demand for
loans with which to buy homes, the Purchase index, fell 10%.  The
Application index fell 10.3% for the week.  The average interest
rate for a 30-year fixed rate mortgage fell to 6% from 6.37%.
The drop in mortgage and refi activity for the week is indicating
either the beginning of the end of the mortgage and credit
bubble, a very significant development, or merely a lag between
rates and mortgage/refi demand.  While it's entirely possible
that demand has been satisfied at and near current rates, I find
the latter case the more likely scenario, and we'll see next
Wednesday whether demand perks up for this current week.

The Philadelphia Housing Index (HGX) was lower today, while
treasuries got sold aggressively throughout the session sending
yields sharply higher, the thirty year yield (TYX) finishing
higher by 15.3 basis points at 5.441%.

One year daily chart of the HGX


The HGX sold off, dropping 5.44 to 286.14.  It seems obvious that
higher rates should slam the brakes on the homebuilders, but
strong yield rally (see TYX below) has yet to have any serious
impact on the index.  Nevertheless, today saw the TYX add 15.5
basis points to the HGX' 5.44 point loss.  If yields post new
year highs, one might expect to see a downward trend in the HGX
assert itself.

One year daily chart of the TYX



Equity futures took a jump at 8:30 when The Commerce Department
reported that U.S. retail sales increased by 1.4% in July,
exceeding estimates of 0.8%, led by purchases of gasoline, autos,
electronics and household goods. The June figure was revised up
to 0.9% from the 0.5% previously reported. Auto sales were up
3.2% in July. Excluding autos, retail sales were up 0.8% compared
with estimates for a 0.5% increase.  Retail sales were higher by
5.6% from July 2002, and this month's figures represent the
largest increase since March of this year.  It was reported that
sporting goods stores and non-store retailers were the only
retail categories to see a decline in sales for July.  The
financial press reported that this data is evidence of the sharp
economic recovery that some are seeing.  This may well be the
case, but I find the water excessively muddied by the recent
sharp moves in interest rates, the ongoing new highs in consumer
credit, and the aggressive inflation of money supply by the Fed.
The combination of increased sales with the recent declines in
initial claims paints a potentially bullish picture for the
economy, but ongoing price inflation, continuing unemployment
claims and duration of that unemployment remain worrisome.

On that point, President G.W. Bush, following a meeting with his
top economic advisors, told reporters that in his opinion, the
current round of tax cuts and incentives should be sufficiently
robust to create jobs, and that his administration is upbeat on
the employment outlook.  In a separate statement, U.S. Treasury
Secretary John Snow said that, "When an economy is recovering, it
is normal to see interest rates rise some. So I would point to
the rising interest rates as an indication that the economy is
coming back."

While Mr. Snow is not the only observer to share that opinion, I
do not.  Unless a significant uptick in employment and domestic
corporate spending occurs (ie spending at home, and not foreign
direct investment), the rise in yields looks purely negative to
me, particularly in light of the alltime record levels of
personal indebtedness and bankruptcies already occurring in this
year's "as good as it gets" credit environment.  The increase in
yields will only exacerbate these problems, putting additional
pressure on the straining consumer, as well as corporate and
government borrowers.  As a purely technical aside, a better than
130 basis point jump in yields within a 2 month period looks like
more than interest rates merely "rising some", as Secretary Snow
puts it, but the matter is open to interpretation.

The Labor Department reported that the price of imported goods
rose 0.5% in July following a rise of 0.7% in June, exceeding
estimates of a 0.3% increase.  Prices for exported goods fell
0.1%. Prices rose in nearly all major sectors, with petroleum
import prices rising 3.7% in the month while non-fuel import
prices rose 0.1%.

The Energy Department reported a 200,000 barrel increase in crude
oil supplies for the week ended August 8, while the American
Petroleum Institute reported a 3.2 million barrel increase to
281.3 million barrels. Gasoline supplies fell 1.85 million
barrels to 200 million barrels and distillate inventories lost
836,000 barrels to 117 million barrels according to the API.
Unsurprisingly, analysts were caught flatfooted again, expecting
a drop in crude oil supplies for the week.  Crude oil futures led
the Commodities Index to the downside, dropping 1.14 or 3.57% to
$30.78 per barrel. Notwithstanding today's drop, crude remains
above the widely-regarded 30 per barrel level and continues to
pressure the economy.

We have the following economic data due tomorrow:

               Report                   Briefing  Market    Prior
                                        Expects   Expects
Aug 14 8:30 AM Core PPI Jul -             0.1%     0.1%     -0.1%
Aug 14 8:30 AM Initial Claims 08/09 -     385K     393K      390K
Aug 14 8:30 AM PPI Jul -                  0.1%     0.1%      0.5%
Aug 14 8:30 AM Trade Balance Jun -      -$42.0B  -$42.0B  -$41.8B
Aug 14 2:00 PM FOMC Minutes

With bonds selling off aggressively today and gold rallying, the
markets should be particularly sensitive to the 8:30 news.  The
initial claims data is expected to be low, and any upside
surprise could be the straw that breaks the camel's back on the
bear flags we've been watching.  Nevertheless, it is options
expiration week, and price has a habit of misbehaving during this
period.  We'll trade what the markets give us and exercise
caution in either direction.



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

KR      Kroger Company             17.70     +0.65
S       Sears Roebuck & Co         43.25     +0.53
IR      Ingersoll-rand Ltd CI A    56.30     +0.81
MGA     Mafna International Inc    77.96     +1.46
ABS     Albertson's Inc            19.90     +0.88
DRI     Darden Restaurants         20.96     +0.74
RGS     Regis Corp                 31.87     +0.87
CLE     Claires Stores Inc         30.70     +0.80
GGB     Gerdau Sa Ads              12.40     +0.73
OSIS    OSI Systems Inc            16.55     +0.81


---------------------------------------
Breakout to Upside (Stocks $5 to $20)
---------------------------------------

PKN     Petrokazakhstan Inc        17.18     +1.26
WTEL    Wiltel Comm Group Inc      15.89     +1.82
DRTE    Dendrite International Inc 14.60     +1.30
ISPH    Inspire Pharmaceuticals    14.10     +2.25
KDE     4Kids Entertainment Inc    19.15     +3.00
TCBI    Texas Capital Bancshares   11.99     +10.99


---------------------------------------
Breakout to Upside (Stocks over $20)
---------------------------------------

DE      Deere & Co                 55.00     +1.49
SWY     Safeway Inc                22.53     +1.28
CHIR    Chiron Corp                46.33     +1.54
TIF     Tiffany & Co               37.41     +1.13
GNTX    Gentex Corp                36.27     +2.85
AAP     Advance Auto Parts Inc     71.00     +2.29
AG      Agco Corp                  20.23     +1.10
SILI    Siliconix Inc              47.46     +2.82
TECH    Techne Corp                33.69     +1.61
TRN     Trinity Industries Inc     25.18     +1.19
ESPD    Espeed Incorporated CI A   22.15     +2.20
WMS     WMS Industries Inc         22.60     +2.61
FINL    Finish Line Inc CI A       26.19     +1.07
KIND    Kindred Healthcare Inc     27.65     +5.58


-------------------------------------------
Breakout to Downside (Stocks over $20)
-------------------------------------------

PFE     Pfizer Inc                 31.56     -1.31
MDT     Medtronic Inc              50.88     -1.77
BSX     Boston Scientific Corp     62.10     -1.40
DISH    Echostar Communications    34.27     -1.85
CSC     Computer Sciences Corp     40.40     -3.22
AVB     Avalonbay Communities      46.05     -1.20
PGTV    Pegasus Commun Corp CI A   20.90     -1.15
BSML    Britesmile Inc             33.23     -2.78

-----------------------------------------
Recently Overbought With Bearish Signals (Stocks over $20)
-------------------------------------------

MUEL    Paul Mueller               40.98     -1.57



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Do not duplicate or redistribute in any form
PremierInvestor.net Newsletter                Wednesday 08-13-2003
                                                    section 2 of 2
Copyright ) 2003, All rights reserved.
Redistribution in any form is strictly prohibited.

The entire newsletter is best viewed in COURIER 10 for alignment

Tech Stocks
  New Bullish Play:      IRF
  Bearish Play Updates:  NVLS

Active Trader (Non-tech)
  Bullish Play Updates:  HOTT, HELE, NEM
  Bearish Play Updates:  DAL, SHRP, JPM
  Closed Bearish Plays:  FDP

High Risk/Reward
  New Bullish Plays:     LSI
  Bearish Play Updates:  SOHU


==================================================================
Net Bulls (NB) Tech Stock section
==================================================================

=========
NEW PLAYS
=========

Int'l Rectifier - IRF - close: 32.99 change: +1.35 stop: 30.00

Company Description:
International Rectifier Corporation is a designer, manufacturer
and marketer of power management products and a worldwide
supplier of a type of power semiconductor, MOSFET (a metal oxide
semiconductor field effect transistor).  Power semiconductors
process electricity into a form more usable by electrical
products.  The company's products are divided among three broad
product categories: analog integrated circuits (ICs) and advanced
circuit devices, power systems and power components.  IRF's
products are used in a range of end markets, including consumer
electronics, information technology, automotive, aerospace and
defense, communications and industrial.

Why we like it:
If we had a nickel for every unexpected reversal over the past 2
months, we'd have a lot of nickels!  Well, the Semiconductor
index (SOX.X) is the latest major reversal to make its
appearance.  Last Friday, the SOX broke below its months-long
ascending channel and looked like it was down for the count.
Three days later, the index has broken back into that channel and
is once again challenging strong resistance at $400.  That brings
us to our new bullish candidate, IRF, which has continued to work
steadily higher in its own ascending channel.  A couple weeks
back, it looked like the stock's rise would be capped near $30,
the site of strong resistance going back to last July.  But the
market liked the company's earnings report on July 31st and the
stock rocketed through that level the next day.  That rise topped
out just over $32, pulled back to confirm new support at $30 and
then broke out again today.

The PnF chart has good things to say as well, with the breakout
over $31 generating another Buy signal, hinting that the current
bullish price target of $42 just might be achievable.  Isn't it
interesting how that correlates with very strong support (now
resistance) before the big breakdown last July.  We don't want to
get too greedy shooting for the moon, so we'll set our sights a
bit lower, initially targeting a move into the gap between
$34.75-37.25 and then we'll see if there's any more gas in the
tank.  We're looking for the stock to continue working higher in
its channel, so that means targeting entries on pullbacks near
$31.  Aggressive traders can certainly consider entering on
further strength above $33.50 (today's intraday high), but should
only do so if the SOX is continuing to surge, preferably above
the $400 level.  The risk of chasing the stock higher is that the
top of the channel currently $34.25 will likely present near-term
resistance.  We're initiating coverage with our stop set at $30,
which is just below the intraday low from last Friday.

Annotated Chart of IRF:


Picked on August 13th at  $32.99
Change since picked        +0.00
Earnings Date           10/30/03 (unconfirmed)
Average Daily Volume =     883 K



============
PLAY UPDATES
============

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


Novellus Systems - NVLS - close: 35.43 change: +1.25 stop: 36.25

That is not the way this was supposed to work!  NVLS gave us a
picture-perfect break below support last Friday, confirmed by the
Semiconductor index (SOX.X) breaking down out of its months-long
ascending channel.  We don't know where those bears went over the
weekend, but they certainly lost their conviction.  NVLS found
support on Monday and Tuesday near Friday's low and then vaulted
higher today, gaining 3.65% on above average volume.  The only
saving grace was the afternoon reversal from just above $36,
keeping the stock below our $36.25 stop.  But even after the
afternoon fade, NVLS is now back above the strong support at $35
that was broken on Friday.  We're keeping the play alive for now
in anticipation of the SOX once again being rejected from the
$400 resistance level.  But we are not recommending new positions
at this time.  We need to see the stock back under $34.50 (the
bottom of that support zone) before considering new entries.
Conservative traders will want to see a break below $33 before
playing.

Picked on August 10th at  $33.32
Change since picked        +2.11
Earnings Date           10/20/03 (unconfirmed)
Average Daily Volume =  8.83 mln






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



============
PLAY UPDATES
============

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


Hot Topic, Inc. - HOTT - cls: 31.50 chng: +0.78 stop: 29.45*new*

Tuesday, HOTT announced a three-for-two split of the company's
common stock.  The split will take the form of a share dividend
and will be effective September 2 for shareholders of record as
of August 21.  If this stock's chart sizzled last week when we
chose the play, it really crackles since that announcement.  HOTT
jumped above the sedate regression channel that had been
containing its prices since early March, showing signs of going
parabolic.  We're enjoying going along for the ride.

Today, competitor Too, Inc. (TOO) was cut to a sell by AG Edwards
after reporting a weak Q2 and cutting estimates for the Q3. TOO
sells apparel and lifestyle products to teenaged girls, the same
age group HOTT targets.

Participants should remember that earnings are August 20 and
we'll be closing this play ahead of those earnings.  Although it
looks as if we were lucky enough to capture the beginning of an
old-fashioned earnings and split run, conservative traders should
begin taking profit now or as those earnings approach.  There may
not be time for a pullback to support and a new launch before we
close the play.

Nothing on the chart says pullback yet, however.  Volume
continues to support the upward move, although the volume hasn't
again equaled that strong push last week.  MACD remains strong.
Stochastics hint at a bearish kiss, but oscillators often give
false signals in a strongly trending market.

We would not suggest new entries this close to earnings.

Annotated Chart for HOTT:



Picked on Aug 10 at  30.16
Change since picked: +1.34
Earnings Date:    08/20/03 (confirmed)
Average Daily Volume:  448 thousand



----

Helen of Troy - HELE - cls: 21.21  change: +0.02 stop: 19.60*new*

Retailers got off to a strong start Wednesday, with retailers
Wal-Mart (WMT) and Federated Department Stores (FD) reporting Q2
results that some tagged as promising.  July retail sales were
reported up 1.4 percent, with the market expecting a 1.0 percent
climb according to one source.  The retail index, the $RLX,
started off on an upswing, but a downgrade to WMT due to
valuation weighed on that stock and the sector.

Like the retail index, HELE swung up in early trading but then
dipped.  It recovered, but never reached the morning's high
before closing flat.  Volume proved light on a light-volume day
for the indices.

By the close of the day, HELE had outperformed the RLX, matching
its 0.09 percent climb to the RLX's 0.09 percent decline.  HELE's
chart reveals a MACD that still looks strong, although both RSI
and stochastics hint at equal highs while prices made higher
highs.  These oscillators can't keep climbing indefinitely,
however, and so sometimes do seem to depict bearish divergence
when a stock trends this strongly.

We don't discount the possibility that HELE might need to pull
back and regroup.  A light-volume pullback and bounce above
$20.00 might make an ideal new entry.  Our first target remains
the $22.80-23.00 zone, predicted by HELE's recent upside breakout
of its month-long trading range.

Annotated Chart for HELE:



Picked on Aug 10 at  21.03
Change since picked: +0.18
Earnings Date:    07/09/03 (confirmed)
Average Daily Volume:  432 thousand



----

Newmont Mining - NEM - cls: 38.48 chng: +0.78 stop: 37.25*new*

Another selling spree in the bond pits on Wednesday, combined
with another gain for gold, has our bullish play on the largest
gold mining company looking ripe for another breakout attempt.
NEM has actually been treating us rather well after breaking out
above $37 last week and after just missing our initial profit
target of $39 by a few pennies on Monday, pulled back to find
higher support near $37.40.  Of course, it doesn't hurt that gold
is back over $360/ounce and the Gold and Silver index (XAU.X) is
threatening to break out over its own $88 resistance.  There is
still resistance near $89 from last spring, but once clear of
that obstacle, the XAU looks ready to run to new multi-year
highs.  NEM is ahead of the game though, having already set 5-
year highs on Monday and a trade at $39 would repeat the process.
Recall that there is stiff resistance in the $39-40 area and the
stock will likely have a hard time breaking through that area on
the first try.  So we're still advising traders to harvest gains
on the play if price moves into that zone and begins to weaken.
We're getting a bit more stingy with our stop tonight, raising it
to $37.25, just below this week's intraday lows.

Picked on July 23rd at   $35.28
Change since picked       +3.20
Earnings Date            7/31/03 (confirmed)
Average Daily Volume =  4.58 mln




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


Delta - DAL - close: 10.89  change: +0.09 stop: 11.86*new*

Tuesday, U.S. agents arrested a British arms merchant and two
others allegedly trying to sell a shoulder-launched surface-to-
air missile to undercover agents in New Jersey. Also this week,
British Airways suspended some flights, listing security concerns
they did not identify.  Some felt these developments should have
pressured the airlines, but perhaps investors were reassured by
the arrests, feeling that security issues were being addressed.
The XAL rose 0.45 percent, with DAL trumping that percentage gain
with a 0.83 percent gain of its own.  DAL's climb came on about
2/3 average daily volume.

The day didn't begin so happily for DAL, with Wednesday's trading
beginning with DAL below cruising level.  The news stations
covered the New Jersey arrests and some questioned homeland
safety issues.  As this update is being prepared after the close,
CBNC still addresses airline safety issues in special segments.

It wasn't until midday that DAL climbed. News specific to DAL
included the announcement this week that it would stop
contributing to a pension plan meant to keep top executives
onboard as DAL struggles to pull up out of the airline industry
downturn.  As of Tuesday, the pilots' union had not yet completed
its review of the company's plan.  Talks between company
representatives and the pilots' union had fallen apart in July,
but a union representative stated that the pilot's union remained
willing to discuss their goals with company management.  That
pension rankled other employees, whose pension is thought to be
underfunded. DAL made other efforts to impress investors,
attempting to make its $800 million offer to exchange old notes
for new notes and cash more appealing.

DAL's chart displays a potential bear flag pattern rising into
resistance.  After a steep decline, a tight pattern of higher
highs and lower highs characterizes this pattern.  The usual
outcome arrives with a downside breakout as prices hit that
resistance.  For DAL, that resistance consists of historical
resistance and a number of moving averages now converging
overhead.  The closest is the 10-dma, just overhead at $10.92.
DAL has been testing this descending moving average all week but
has not yet been able to maintain levels above that average.
That may change later in the week, but then DAL confronts its
200-dma at $11.76.  We're placing our new stop just above that
200-dma, with the stop at $11.86.

Annotated Chart for DAL:


Picked on July 30 at 11.15
Change since picked: -0.26
Earnings Date:    07/17/03 (confirmed)
Average Daily Volume:  3.3 million



----

Sharper Image - SHRP - close: 24.64  change: +0.11 stop: 18.79

Sharper Image tried to pierce overhead resistance this week, but
much lower volume accompanied those attempts.  SHRP has so far
been unsuccessful in moving back above the neckline of its head-
and-shoulders formation.  The rise has not yet been enough to
turn oscillators back up with the exception of the RSI, which
already appears to be flattening again.  Wednesday's candle was a
small doji at resistance, hinting that it could be followed by a
decline later in the week.

Several moving averages slant down toward SHRP.  If a rollover is
occurring, it's happening from a higher level than we
anticipated, however, so we would not suggest new entries on a
rollover.  Aggressive players who like to enter on momentum could
target a new entry on a break below Monday's low, but should be
cognizant of possible first support near $22.00.  We're targeting
$21.00.

We couldn't find news to explain SHRP's rise on Tuesday.
Wednesday, SHRP seemed to be trading independent of the RLX.
SHRP's trading didn't produce the early ramp up seen in the RLX
and many retail stocks, and instead the stock found its highest
levels in the early afternoon before it dove into the close.

Annotated Chart for SHRP:


Picked on Aug 10 at  24.65
Change since picked: +0.99
Earnings Date:    08/21/03 (confirmed)
Average Daily Volume:  260 thousand



----

J.P. Morgan Chase - JPM - cls: 33.43 chng: -0.21 stop: 34.75

There certainly hasn't been much to get excited about in our JPM
play this week, as the stock continues to hover near the $33
level.  The Broker/Dealer index (XBD.X) has managed to reclaim
the $550 as support and that is helping JPM to hold above the $33
level.  But we still like the bearish prospects here, given the
stock's lack of participation in the sector rally.  Since
bottoming near $32.50, the stock has spent the past 6 sessions
creeping higher in a shallow ascending channel that looks an
awful lot like a bear flag.  One encouraging sign is that
resistance near $33.80 (intraday resistance following the big
breakdown on 8/01) is still holding and aggressive traders can
still look to initiate new positions on failed bounces below $34.
An alternate strategy will be to wait for a break below the
bottom of the bear flag (currently $33.20) before playing.  More
conservative traders may want to wait for a break below $32.40
(the 8/01 intraday low) before getting their feet wet.  Maintain
stops at $34.75, which is just above the 50-dma.

Picked on July 30th at   $33.36
Change since picked       +0.07
Earnings Date           10/15/03 (unconfirmed)
Average Daily Volume =  9.55 mln





============
CLOSED PLAYS
============

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

Fresh Del Monte Prod. - FDP - cls: 27.40 chng: +0.82 stop: 27.50

Bears must be tearing their hair out all over the place tonight
and we have to count ourselves among them.  FDP looked primed for
a breakdown when we initiated coverage last week, and fortunately
we set our entry trigger in the correct place.  The stock dipped
to $25.80, testing the 7/21 low and the 50-dma and has been
moving higher ever since.  Wednesday's 3% gain was the final
straw, as the stock moved through our $27.50 stop early in the
day, removing it from consideration for new positions.  Since the
play was never triggered, we'll chalk it up as another rejected
breakdown and move on to better candidates.

Picked on August 6th at  $26.20
Change since picked       +1.20
Earnings Date          10/28/03 (unconfirmed)
Average Daily Volume =    515 K






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

=========
NEW PLAYS
=========

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


LSI Logic - LSI - close: 9.46  change: +0.30 stop: 8.99

Company Description:
LSI Logic Corporation (NYSE: LSI) is a leading designer and
manufacturer of communications, consumer and storage
semiconductors for applications that access, interconnect and
store data, voice and video.  In addition, the company supplies
storage network solutions for the enterprise.  (Source:  Company
Press Release)

Why We Like It:
LSI caught our attention when we noticed that it had sprung up
from an ascending trendline, leaped above its 21- and 10-dma's,
and bounded out of a bull flag pattern.  Many semiconductor
stocks and the $SOX itself show these characteristic patterns,
but they appear particularly well developed on LSI's chart.
Because some bull flags have fallen apart lately, we're setting a
trigger for our entry at $9.70.  That entry should coordinate
fairly well with a $SOX move back above $400.00, too, which
should give further corroboration of the play's viability.  We're
targeting a move to $12.00.

Wednesday, LSI Logic Storage Systems announced that LightSand's
SAN extension gateway had passed compatible testing and that the
gateways would now be available to customers.  This results in a
disaster recovery solution that would be more robust, according
to a company spokesperson.  On Monday, LSI announced that Chinese
telecommunications equipment giant Datang Microelectronics had
licensed one of LSI's products for use in a handset design.

Annotated Chart for LSI:


Picked on August 13 at 9.46
Change since picked:  +0.00
Earnings Date:     07/23/03 (confirmed)
Average Daily Volume:   4.5 million




============
PLAY UPDATES
============

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

SOHU.com - SOHU - close: 32.42  change: +1.21 stop: 34.30

SOHU climbed Wednesday, but it did so without its companions SINA
and NTES, other Chinese Internet stocks.  Those stocks dropped in
Wednesday's trading.  Although SOHU's volume measured just a
little more than 3/4 of average daily volume, we don't like the
way it outperformed other stocks in this space.

We still think SOHU appears to be forming the right shoulder of a
possible head-and-shoulder formation.  Although MACD still turns
down, RSI and stochastics have picked up as SOHU tests
resistance.  A phalanx of moving averages slopes down to meet
SOHU's advances, with some of those averages just above SOHU's
current prices.  Further gains should be hard won, but the
increased volume last week and outperformance of peers this week
worries us.

Last week, many participants in this play may have taken gains
when SOHU dipped within $0.43 of our target.  We hope other
investors will soon have the opportunity to do so.  With SOHU's
strong performance the last few days, we would not suggest new
entries at this time.

Annotated Chart for SOHU:


Picked on August 6 at 32.27
Change since picked:  +0.15
Earnings Date:     07/23/03 (confirmed)
Average Daily Volume:   4.6 million





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