Oracle Warning Indeed Proving Prophetic

  • March 2, 2001
  • Tony Saliba

An
earnings warning from tech titan Oracle
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market into an early plunge on this Friday. Options players seem to be taking
the news in stride. Our early morning
search engines are humming a hackneyed tune: Call sellers lead the pack as
traders collect premium, and the tech sector commands the lions share of
activity. Volatility has spiked somewhat
this morning, (in line with the market’s downward trajectory), but a light-to-moderate
volume of order flow is tethering its skyward
ascent. order flow
is registering a 2.0 on a scale of 1.0-10.0, with 2.6 being our 30-day moving
average.

How much lower
will we go? The big psychological barrier, “Nasdaq 2000,” is beginning to
loom large, sucking us toward it like a large magnet. Options players may
experience a further spike in vol now, with fear popping into the mind-set
again. The closer we come to 2000, and a surge of paper will most likely
accompany the phenomenon.

The market may
now discount the Microsoft appellate trial, even with its strong possibility of
a reversal of the original verdict. The
latest flap Softie has stirred is with
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is looking into the advertising around last year’s campaign for the pocket PC —
although the stock has held up well in the midst of all of the blood showering
down around it.

I’m not
normally  “a bull,” and I know I
haven’t suggested anything specifically to work the downside since coming
“on line,” but we’re playing the bounces “close to the vest,”
and probably when I find a bear vertical or out-of-the-money butterfly to
suggest, that will be the bottom. In the meantime, here are today’s numbers…

Pre-Bell
order volume remained light this morning. Overall, call sellers led buyers 3:2
while put sellers beat out buyers at 3:2.  In first hour activity,
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call sellers outnumber buyers 2:1. 
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call sellers led buyers 6:1. 
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call buyers showed up leading sellers 3:1, while put sellers trump buyers 2:1. 

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call sellers now dominated buyers 3:1.
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call sellers led buyers 6:1. 
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call buyers showed up dominating sellers 5:2.



First hour order
volume remained light this morning. Overall, call buyers led sellers now at 
3:2 while put sellers beat out buyers at 2:1.  In first hour
activity,
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EMC |
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(
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showed up leading sellers 2:1, while put sellers smashed buyers 7:1.
(
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(
MO |
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2:1. 
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up dominating sellers 7:1.
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call buyers showed up dominating sellers 6:1.

Have a good
weekend everybody, and keep those questions coming:tonys@tradingmarkets.com