Wednesday’s Options Alerts

• September 24, 2002
• TradingMarkets Editors

It was a
rocky day as warnings from Weyerhaeuser
(
WY |
Quote |
Chart |
News |
PowerRating) and Rohm and Haas
(
ROH |
Quote |
Chart |
News |
PowerRating),
along with an earnings shortfall from Lehman Brothers
(
LEH |
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Chart |
News |
PowerRating) and more accounting
trouble from Xerox
(
XRX |
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News |
PowerRating) weighed heavily on the market from the start. A
slightly better-than-expected September consumer confidence number inspired a
small blip up but the sell off continued after the Fed left rates unchanged
at 1.75%. 

Despite many attempts to push higher, both the Dow and S&P closed
near the lows of the day while the Nasdaq managed to shrug off its lows after
digging deeper into its six-year lows. At the
close, the Dow
(
$INDU |
Quote |
Chart |
News |
PowerRating) dropped 188.95 points or 2.40%, the index also broke to a
four-year low on a closing basis. The S&P
(
$SPX.X |
Quote |
Chart |
News |
PowerRating) lost
14.43 points or 1.73% closing just above its 78.6% retracement at 816.19. The Nasdaq
(
$COMPX |
Quote |
Chart |
News |
PowerRating) displayed some relative strength today
despite bearish comments from Novellus Systems
(
NVLS |
Quote |
Chart |
News |
PowerRating). The Naz gave up 2.65
points or 0.22% after falling 15 points earlier in the session. 

Gold stocks
(
$XAU.X |
Quote |
Chart |
News |
PowerRating) up
2.77%, biotechs
(
$BTK.X |
Quote |
Chart |
News |
PowerRating) up 2.06%, and semis
(
$SOX.X |
Quote |
Chart |
News |
PowerRating) were the best performing sectors
of the day. Many biotech and semiconductor issues put in wide range key reversal
bars. Airlines
(
$XAL.X |
Quote |
Chart |
News |
PowerRating) down 7.15% and paper
(
$FPP.X |
Quote |
Chart |
News |
PowerRating) down 6.29%
were the worst performing sectors of the day. 

For the
fourth straight month consumer confidence declined. Consumer confidence for
September declined to 93.3, but better than the expected 92.3 reading. As
expected, the Fed left rates unchanged at the 40-year low of 1.75% along with an
easing bias. The VIX
(
$VIX.X |
Quote |
Chart |
News |
PowerRating) gapped up, opened near
its highs and closed near its midpoint. This shift in intraday sentiment
shows a drop in fear. Today’s action triggered a CVR
1 buy signal today. The VXN
(
$VXN.X |
Quote |
Chart |
News |
PowerRating) gapped
up, opened
near its highs and closed near near the lows of the day. This shift
in intraday sentiment also shows a rise in fear. Though the Vixen
didn’t trigger any signals. We continue to head deeper into oversold territories
and a bounce could be upon us any day. However volatility is still quite high to
warrant outright option buying.

Points of Significance:

Volatility Index	Close	Net Change	Signals/Direction	% Above/Below 10 Day Moving Average	Significance
VIX	45.38	UP 0.67	CVR I BUY	7.71% Above	Not At Extreme
VXN	59.40	DOWN 0.45	NONE	1.55% Above	Not At Extreme

Abnormal Options Volume With Price Movement
—
Abnormal options volume (calls and puts) with stock price movement

Name	Symbol	Net % Change	Volume	Avg. Volume
OSI Pharmaceuticals	OSIP	+ 27.80	5669	459
Computer Sciences	CSC	– 13.99	809	176
General Motors	GM	– 8.20	16747	8257
Lexmark International	LXK	+ 8.14	2986	945
International Paper	IP	– 6.47	13423	2763
IBM	IBM	– 5.71	81762	25753

Stocks With Biggest Spikes in Implied
Volatility — Stocks with biggest increases or decreases in implied
volatility compared to previous day

Spike Up

Name	Symbol	IV	Previous IV	High IV	Low IV
PennzEnergy	PZL	14.3	10.8	43.2	12.9
Electronic Data Systems	EDS	115.5	88.7	87.9	32.3
Allegheny Energy	AYE	66.6	56.9	57.3	27.4
General Motors	GM	66.6	56.9	57.3	27.4
Echostar Communication	DISH	76.9	67	88.1	41
Constellation Brands	STZ	56.2	49	44.8	25.6

Spike Down

Name	Symbol	IV	Previous IV	High IV	Low IV
OSI Pharmaceuticals	OSIP	104.4	119.5	107.7	50.1
Amgen	AMGN	52.9	59.9	73.3	30.7
NPS Pharmaceuticals	NPSP	73	81.2	140.9	51.7
Unilab	ULAB	62.9	69.1	76.5	29.1
Roadway Express	ROAD	57.5	62.6	56.1	38

Please use stops on every trade!