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By Mark Phillips
From a Position of Strength

WM - Washington Mutual $48.00

That's right. Our old friend WM is back in the limelight again, having successfully defended itself against the bears at the $43-44 support level and making a strong case for further upside as lower interest rates loom in our future. The decline that began in late December looks like the normal profit taking that accompanies a dramatic rise, which WM clearly had, rising more than 150% between March and December. Now back above the important 50-dma ($47.19), with daily stochastics back in ascent mode, and the Fed likely to reduce interest rates by the end of the month, it looks like the most likely near-term direction will be up.

Continuing to impress the street, WM reported earnings last week, 3 cents ahead of analyst estimates. The CEO, Kerry Killinger, indicated that despite a slowing economy, the company was entering the new year from a position of strength due to high asset quality. We are looking for aggressive entry points on an intraday dip to the $45-46 support level, so long as it is followed by a solid bounce. More conservative players will want to stage a rally through the $50 resistance level before adding new positions. In either case, we expect WM to continue the stellar performance of the last 8 months and challenge its highs near $56 in the near future.

BUY LEAP JAN-2002 $50.00 WWI-AJ at $ 7.25
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