Tuesday’s Options Alerts

• April 1, 2002
• TradingMarkets Editors

The markets started the day sharply lower, but later
recovered with the Dow
(
$INDU |
Quote |
Chart |
News |
PowerRating) and S&P
(
$SPX.X |
Quote |
Chart |
News |
PowerRating) recovering the majority of
their losses, while the Nasdaq
(
COMPX |
Quote |
Chart |
News |
PowerRating) actually ended in the green. Oil stocks were once again the
strongest sector as tension in the Middle East helped pushed oil futures above
the $27 level. Airline issues were among the weakest due to rising oil
prices. In a sign of increasing manufacturing strength, the Institute of Supply
Management Index for March jumped to a 23-month high of 55.6% compared to
February’s reading of 54.7%. For more information on today’s action, please refer to
the market
recap.

The VIX 
(
$VIX.X |
Quote |
Chart |
News |
PowerRating)
gapped up and opened near the top third of its range and closed near the lows of the day.
This shift in
intraday sentiment suggests that fear is dropping. Today’s action triggered a CVR
I buy signal. The VXN
(
$VXN.X |
Quote |
Chart |
News |
PowerRating)  opened near the top third of its range and closed on its lows. This shift in intraday sentiment also
suggests that fear is dropping. The VXN triggered a CVR II sell signal. After
four CVR sell signals on Thursday, the markets started the new quarter on a weak
note, but then reversed.  

Points of Significance:

4 Kids Entertainment
(
KDE |
Quote |
Chart |
News |
PowerRating) lost
almost 10% on four times its average volume. The maker of the once-popular
Pokemon toys reported fourth quarter earnings of 16 cents per share, down from
65 cents a year ago. The company attributed the decrease to a slowdown in
licensing revenues from Pokemon products.  The shares did manage to close
above its .50 retracement level from its Feb. 20 low. There is increased
activity in the August 17.50 calls.

Ross Stores
(
ROST |
Quote |
Chart |
News |
PowerRating)
dropped 4.70% on heavy volume. The stock succumbed to weakness after Merrill
Lynch had some negative comments about the retail sector. Merrill commented that
retail stocks have a had a tremendous run and that “the good times now
appear to be over.” Merrill also downgraded a number of stock including
Ross stores. The shares bounced back from intraday lows and close on the coincidence
of its 50-day moving average and its .50 retracement level. Put activity on Ross
is nearly non-existent. There is heavy activity in the May and July 35 calls.

Defense issues were strong today after
this past weekend’s Barron’s article. Aliant Techsystems
(
ATK |
Quote |
Chart |
News |
PowerRating) broke out to
a new 52 week high on heavy volume. There is heavy activity in the April 110
calls. 

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

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

Spike Up

Spike Down

Please use stops on every trade!