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	From:  xtrials@optioninvestor.com (Option Investor Newsletter     Trials)     
                       01/19/99 09:12 PM
	

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Subject: Tuesday - Option Investor Newsletter 3 of 3



The Option Investor Newsletter         Tuesday  1-19-98
Copyright 1998, All rights reserved.
Redistribution in any form strictly prohibited.


**********************************************************
Great Expectations - By Pinnacle Capital Advisors
**********************************************************

With a number of key corporate earnings reports due out this
week, we have highlighted below the companies that will likely
have the greatest impact on the overall market.  Keep close
track of these companies.  If they beat expectations, we are
likely to move higher.  If not, we are likely to re-test our key
support levels again.

Options traders playing the Technology sectors, watch Microsoft
on Tuesday.  Microsoft will likely dictate the climate for
the technology sector for 1Q99.

Reporting                            Estimated   Pinnacle
Date       Company                         EPS      Index
--------------------------------------------------------------

Hardware:
1/19 WDC   Western Digital Corp.         -1.01        5.4
1/20 QNTM  Quantum Corp.                  0.24        6.2
1/20 SGI   Silicon Graphics, Inc.        -0.19        7.2
1/21 GTW   Gateway                        0.78        1.4
1/21 IBM   Int'l  Business Machines       2.45        5.6
1/21 IOM   Iomega Corp.                   0.05        8.3
1/22 SEBL  Siebel Systems Inc             0.16       11.3
1/22 STK   Storage Technology Corp.       0.51        5.9
1/21 SUNW  Sun Microsystems, Inc.       - 0.66       10.6

Software:
1/19 CA    Computer Associates            0.61        4.5
1/19 CPWR  Compuware Corp.                0.45       11.6
1/19 CTXS  Citrix Systems Inc             0.49       15.1
1/19 MSFT  Microsoft Corp.                0.59       10.8
1/20 CHKPE Check Point Software           0.47       13.0
1/21 BMCS  BMC Software                   0.39        4.6
1/21 SYBS  Sybase Inc.                    0.05        3.8

Semiconductor:
1/19 XLNX  Xilinx                         0.40       13.2
1/20 CRUS  Cirrus Logic                   0.04        6.6
1/20 TXN   Texas Instruments              0.54        6.5
1/21 CUBE  C-Cube Microsystems Inc.       0.31        9.1
1/21 LSCC  Lattice Semiconductor Corp     0.43        9.9
1/21 ADPT  Adaptec Inc.                   0.21        8.3
1/21 QLGC  QLOGIC Corp.                   0.70        4.5

Networking:
1/19 ASND  Ascend Communications          0.31        5.3
1/19 FORE  FORE Systems                   0.10        9.5
1/19 NETA  Network Associates             0.46        1.3
1/19 NVLS  Novellus Systems               0.23        3.0
1/19 QCOM  Qualcom Inc.                   0.59        8.7
1/21 LU    Lucent Technologies            1.00        4.5

Telecommunications:
1/20 USW   US West , Inc.                 0.73        7.0
1/21 AIT   Ameritech Corp.                0.61        3.8
1/21 BEL   Bell Atlantic                  0.69        2.1

Internet:
1/19 ONSL  Onsale Inc                    -0.16        7.0
1/20 ATHM  At Home Corporation           -0.06        4.4
1/20 DCLK  DoubleClick Inc.              -0.26        2.9
1/20 SPYG  SpyGlass Inc.                 -0.15        5.2
1/21 XCIT  Excite Inc.                    0.04        5.0

Financial:
1/18 PNC   PNC Bank Corp                  0.92        8.6
1/19 BK    Bank Of New York               0.40        1.7
1/19 ONE   Bank One Group                 0.88        7.2
1/19 BAC   BankAmerica Corp.              0.93        2.4
1/19 COF   Capital One Financial          1.04        4.9
1/19 CMB   Chase Manhattan Corp.          1.19        4.0
1/19 JPM   Morgan (J.P.) & Co.            0.38        6.2
1/19 WFC   Wells Fargo Inc.               0.46        9.3
1/21 BKB   BankBoston Corp.               0.70        9.4
1/21 BT    Bankers Trust New York Corp    0.58         .6

Brokerage:
1/18 SCH   Schwab (Charles) Corp.         0.23        4.5
1/19 MER   Merrill Lynch & Co             0.64        4.3
1/20 PWJ   Paine Webber Group             0.55        3.8
1/21 AMTD  AmeriTrade                     0.09        2.4
1/21 DLJ   Donaldson Lufkin & Jenrette    0.49        4.5

Pharmaceutical:
1/19 PFE   Pfizer Inc.                    0.52        2.2
1/20 BMY   Bristol-Myers Squibb           0.90         .7

Airline:
1/19 DAL   Delta Air Lines, Inc.          1.25        8.4
1/19 NWAC  Northwest Air.                -1.47        2.6
1/20 AMR   AMR Corp.                      1.16        1.7
1/20 UAL   UAL Corp                       1.47        1.6
1/20 U     US Airways Group Inc.          1.21        2.9
1/21 LUV   Southwest Airlines Co.         0.28        4.3

Oil & Gas:
1/19 SLB   Schlumberger Limited           0.50        1.8
1/21 XON   Exxon Corporation              0.57        1.8

Consumer:
1/18 CCE   Coca-Cola Enterprises         -0.09        1.8
1/20 GM    General Motors Corp.           2.61        2.5
1/21 CLX   Clorox Co.                     0.54         .8
1/21 DIS   Disney (Walt) Productions      0.24         .8
1/21 F     Ford Motor Co.                 1.27        9.8
1/21 S     Sears, Roebuck And Co.         1.45        4.6
1/21 PRD   Polaroid Corp.                 0.12        1.1



Excessive Optimism / Pessimism

Often times when companies release corporate earnings, the stock
will move/gap up or down depending on the level of expectation
built into the stock prior to the release date.  This level of
expectation can be measured, in part, by the Call/Put ratio and is
represented by our Pinnacle Index figure.  The average Pinnacle
Index is 2.0.  Therefore, an index appreciably higher than 2.0
reveals a high level of optimism while an index lower than 2.0
reveals a high level of pessimism.  For aggressive options traders,
we have highlighted companies reaching extreme expectation levels
below:

For example, the company with the highest and lowest expectation
reporting this week is Citrix (CTXS) and Bankers Trust (BT) with a
Pinnacle Index of 15.1 and 64, respectively.  This suggests that if
Citrix does not beat their estimate on Tuesday, they are likely to
sell-off.  Conversely, if Bankers Trust beats their estimate or
reports any favorable news, they are likely to move higher.

Reporting                            Estimated   Pinnacle
Date       Company                         EPS      Index
--------------------------------------------------------------

Great Expectations:
1/19 CTXS  Citrix Systems Inc             0.49       15.1
1/20 CHKPE Check Point Software           0.47       13.0
1/19 XLNX  Xilinx                         0.40       13.2
1/19 CPWR  Compuware Corp.                0.45       11.6
1/22 SEBL  Siebel Systems Inc             0.16       11.3
1/19 MSFT  Microsoft Corp.                0.59       10.8
1/21 SUNW  Sun Microsystems, Inc.         0.66       10.6
1/21 LSCC  Lattice Semiconductor Corp     0.43        9.9
1/21 F     Ford Motor Co.                 1.27        9.8
1/19 FORE  FORE Systems                   0.10        9.5
1/21 BKB   BankBoston Corp.               0.70        9.4
1/19 WFC   Wells Fargo Inc.               0.46        9.3
1/21 CUBE  C-Cube Microsystems Inc.       0.31        9.1
1/19 QCOM  Qualcom Inc.                   0.59        8.7
1/19 DAL   Delta Air Lines, Inc.          1.25        8.4
1/21 ADPT  Adaptec Inc.                   0.21        8.3
1/19 ONSL  Onsale Inc                    -0.16        7.0


Low Expectations:
1/21 BT    Bankers Trust New York Corp    0.58         .6
1/20 BMY   Bristol-Myers Squibb           0.90         .7
1/21 CLX   Clorox Co.                     0.54         .8
1/21 DIS   Disney (Walt) Productions      0.24         .8
1/21 PRD   Polaroid Corp.                 0.12        1.1
1/19 NETA  Network Associates             0.46        1.3
1/21 GTW   Gateway                        0.78        1.4
1/20 UAL   UAL Corp                       1.47        1.6
1/20 AMR   AMR Corp.                      1.16        1.7
1/19 BK    Bank Of New York               0.40        1.7
1/19 SLB   Schlumberger Limited           0.50        1.8


The Power of Sentiment Analysis

Last October (1998), Pinnacle Capital Advisors tracked corporate
earnings reports and advised subscribers about the impact that
excessive optimism and pessimism can have on the stocks's performance
following the release of its quarterly earnings report.  If you
recall, we identified several stocks that reached excessive sentiment
levels including Intel (INTC) and Pfizer (PFE).


Reporting                            Estimated   Pinnacle
Date        Company                        EPS      Index
--------------------------------------------------------------
Excessive Optimism:
10/13 INTL  Intel                          .79       5.2
10/13 JNJ   Johnson & Johnson              .70       3.7
10/15 AAPL  Apple Computer                 .49       3.6

Excessive Pessimism:
10/13 JPM   JP Morgan                     1.08        .4
10/12 C     Chrysler                       .87        .7
10/14 PFE   Pfizer                         .57        .9
10/13 GM    General Motors                 .98-      1.2
10/16 G     Gillette                       .30       1.3
10/14 MER   Merrill Lynch                  .56       1.5



The first is Intel (INTC).  The semiconductor powerhouse had
rallied ahead of its earnings report Tuesday night (10/13) and closed
at $83.88.  What's interesting is that they beat the street's estimate
by 9 cents and yet the stock gapped down the next morning (10/14).
And despite the 330 point Dow rate cut rally on Thursday (10/15), the
stock had trouble taking out its recent previous high of $85.88.  Here,
our sentiment analysis alerted subscribers that expectations had gotten
ahead of itself and that despite the good news, the stock had trouble
advancing.

We saw the opposite in the case of Pfizer (PFE).  This blue-chip
Pharmaceutical company had sold off more than 20% from its summer high
($120) to close at $95.50 before its release Tuesday night (10/13).
Here, Pfizer actually missed its estimated earnings by a nickel.
Although the stock initially gapped down the next morning, it quickly
rallied and closed higher. Our message: it's all about understanding
and managing expectations.


Pinnacle Index

What is the Pinnacle Index.  It is simply the put/call ratio at key
overhigh benchmark levels.  Typically, there should be two (2) calls
for every one (1) put.   So when this ratio reaches extremes levels,
it can presage key turning points in the stock.  The average Pinnacle
Index, therefore, should read 2.0.

One of the key components that separate OptionInvestor.com from any
other advisory services is our sentiment indicator or Pinnacle Index.
The Pinnacle Index is designed to measure the level of overhead
resistance at key overhead benchmark levels. This analysis can give
savvy option traders a jump on other traders.

It's important to note that the Pinnacle Index, like many
sentiment indicators, is a contrarian indictor.  This means
that the stock can and will go higher or lower despite what
our sentiment indicators might suggest.  However, our
experience has shown that the market is subject to a
precipitous sell-off if the Pinnacle Index reaches extreme
levels.



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*************************************************************
                      DISCLAIMER
*************************************************************
This newsletter is a publication dedicated to the education
of options 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 or option but an information resource to aid the
investor in making an informed decision regarding trading in
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editor and staff of The Option Investor Newsletter may own,
buy or sell securities presented. All investors should consult
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The newsletter staff makes every effort to provide timely
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