Dow Jones 8,191.29 +488.95  6:25 pm EST, Wed., July 24, 2002  NASDAQ 1,290.23 +61.18  For info, visit access.smallcapnetwork.com .  S & P 500   843.42 +45.72 To be removed, please click here .  Russell 2000   378.56 +14.57  VOLUME 02: ISSUE 50 Trading Alert: Opportunity Strikes In our July 16th edition we introduced our readers to "The Best Performing Telecom Company".  At the time we didn't feel that Covad Communications (COVD) warranted a trading alert.  Although there were rumors of a new alliance/partnership with a large telecom company the evidence was not compelling enough.   In the edition we said:   It seems that investors aren't the only ones noticing the company's turn around.  Through our sources, the SmallCap Digest has learned that there is an internal memo floating around Sprint that mentions "the deal with Covad is Done".  We believe these sources to be reliable but have no guarantee on what the deal is.  We wanted more confirmation and now the SmallCap Digest has received word that as of August 12th Sprint's (FON) DSL sales force will be offering Covad's services.  There should be a formal announcement coming soon from both parties because this is a material development. The following link takes you to Sprint's Business DSL Site which is states:   We're in the process of upgrading services. Please check back here soon to get all the details of the new and improved Sprint Business DSL, with an expanded footprint and new solutions. All indications point towards a very exciting corporate development for Covad.   The stock bounced nicely from $0.80 today to close at $1.01 per share up 12.22%. Notice the chart on the left and the blue line at the $0.80 mark.  The stock has essentially set a double bottom at this level and is now a key support level. Our target for this trading alert is $1.30 which would represent a gain of over 28% from today's closing price.  If the stock gaps open tomorrow (which means it opens up significantly from today's closing price) make sure to NOT chase the stock.  Wait until 10:00am because chances are the stock will be lower.  This is not always the case but more often than not. On any trade it is important to set a stop limit order (for more information on stop loss orders please read our July 12th edition).  In the case of Covad the stop loss should be set between $0.80 to $0.90 per share depending on your risk tolerance. Covad should start trading up as shareholders and traders anticipate the announcement of the deal.  Currently the stock has an average volume of over 895,000 shares per day which means there should not be a problem getting in or out of the stock.  There are 209.1 million shares in the float with over 21.5 million shares short which represents approximately 15% of the float.  Will this deal with Sprint prompt shorts to cover?  Maybe, but that depends on if this deal is one of a few more to come.  What is important to focus on is Covad's turnaround and if they are successful the stock will be up significantly in the long and short term.  With that being said, remember that this is a trading alert and not a "buy and hold for retirement alert".  We are issuing this trading alert based on Covad's pending announcement of a partnership with Sprint which is to begin August 12th. 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