Monday’s Options Alerts

• July 26, 2002
• TradingMarkets Editors

The major indices
traded sideways for the majority of the day, but a final-hour rally helped push
them into the green and ended this very volatile week. At
the close, the Dow
(
$INDU |
Quote |
Chart |
News |
PowerRating) gained 78 points or 0.95%. The Dow, which had
been down eight out of the last ten weeks, actually finished this week with a
gain of 245 points after losing over 600 points last week. The S&P 500
(
$SPX.X |
Quote |
Chart |
News |
PowerRating)
gained 14 points or 1.68% and the Nasdaq
(
$COMPX |
Quote |
Chart |
News |
PowerRating) gained 22 points or
1.77%.  

Insurance
(
$IUX.X |
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News |
PowerRating), drugs
(
$DRG.X |
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News |
PowerRating), and software
(
$GSO.X |
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News |
PowerRating) issues took
the lead today, while gold
(
$XAU.X |
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Chart |
News |
PowerRating), telecoms
(
$XTC.X |
Quote |
Chart |
News |
PowerRating) and
networking
(
$NWX.X |
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PowerRating) show the most weakness. The gold index
(
$XAU.X |
Quote |
Chart |
News |
PowerRating)
has dropped over 20% for the week and is back to its January levels.
Semiconductors, which sold off hard yesterday due to questions about its
industry fundamentals, cracked below their September lows. They could be headed
to the 262 level.
On the economic front, the
revised Michigan Consumer sentiment index came in at 88.1 slightly higher than
the preliminary reading of 86.5. However, this was still lower than June’s
reading of 92.4.

Volatility continued to head lower
today after Wednesday’s dramatic turnaround. The VIX
(
$VIX.X |
Quote |
Chart |
News |
PowerRating) opened near
its highs and closed near the lows of the day. This shift
in intraday sentiment again shows a big decrease in fear. Once again no more CVR
signals were triggered today. The VXN
(
$VXN.X |
Quote |
Chart |
News |
PowerRating) actually ran up to
levels not seen since last October, but then reversed course. It opened near its
highs,
and closed near the lows of the day. The VXN triggered a CVR
1 and 2 buy signals.

Points of Significance:

Action Performance
(
ATN |
Quote |
Chart |
News |
PowerRating) gained 6.7% on below its average volume. The
shares have staged a three-day countertrend rally and is right at its downtrend
line. It could possibility run to the 27.27 area, but a failure to break above
that level could set a up a potential bear spread.

Ann Taylor
(
ANN |
Quote |
Chart |
News |
PowerRating) jumped 5% on average volume. The
stock is stalling out at the confluence of its 200-day moving average and its
61.8 retracement from its July 9th high.

Volatility Index	Close	Net Change	Signals/Direction	% Above/Below 10 Day Moving Average	Significance
VIX	40.44	DOWN 4.21	NONE	6.75% Below	Not At Extreme
VXN	69.02	DOWN 0.46	CVR I, 2 BUY	5.28 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
ASA Ltd.	ASA	– 10.61	3154	919
Motorola	MOT	– 10.50	23317	8973
Endocare	ENDO	– 6.93	5181	247
Action Performance	ATN	+ 6.76	2033	104
Ann Taylor Stores	ANN	+ 5.31	2425	587
Newmont Mining	NEM	– 4.51	14003	5374

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
Pennzoil-Quaker State	PZL	17.6	13.7	43.2	14.8
Public Storage	PSA	31.7	22.2	23.5	17.6
DPL Inc.	DPL	44.2	34.7	37	15.5
Duane Reade	DRD	80.4	66	46.6	28.9
Novartis AG.	NVS	49.2	40.8	35.2	18.1
Helix Technologies	HELX	79.8	67.6	62.7	41.4

Spike Down

Name	Symbol	IV	Previous IV	High IV	Low IV
Tyco International	TYC	120.9	174.5	150.9	49.5
American International	AIG	47.3	61	43.7	23.4
Choicepoint	CPS	39.4	50.5	45.7	22.4
Manhattan Associates	MANH	105.6	135.3	108.1	70.6
IStar Financial	SFI	24.4	29.9	31.1	16.9
Biosite Inc.	BSTE	85.7	104.7	89.4	47.7

Please use stops on every trade!