Monday’s Options Alerts

August 16, 2002
TradingMarkets Editors

After two days of
hard-fought gains, the major indices ended mixed today. The
Dow and S&P retreated while the Nasdaq powered higher for the third
consecutive session, thanks in part to a rosy third quarter outlook from Dell
Computer.

The Dow
(
$INDU |
Quote |
Chart |
News |
PowerRating) dropped 40 points or 0.45% thus forming an inside
bar for the day. The index has now shown its fourth straight week of gains, but
despite the volatility, the Dow was barely up 0.03% for the week. The S&P
(
$SPX.X |
Quote |
Chart |
News |
PowerRating)
dropped 1.48 points or 0.15%, held back after hitting resistance at its 50-day
moving average. This was also the fourth straight week of gains for the S&P, up 2.2% for the week. The Nasdaq
(
$COMPX.X |
Quote |
Chart |
News |
PowerRating)
gained 16 points or 1.18%.

For the week, the Naz gained over 4%. Lots of mixed
economic reports came on the horizon today. First, the preliminary August
Michigan Consumer Sentiment number dropped to 87.9 from July’s reading of
88.1. This was the lowest reading since last November, but the rate of decline
seems to be stabilizing as the index dropped over 4 points in each of the prior
two months. The CPI for July gained 0.1%, economists were calling for a 0.2%
rise. The core rate gained an expected 0.2% as expected. This suggest that
inflation is still a non-issue. Housing starts in July also slipped 2.7% to a
1.649 million rate while building permits gained 0.5% to a 1.698 million rate.

The VIX
(
$VIX.X |
Quote |
Chart |
News |
PowerRating) gapped up, opened near
at its highs, and spent the day working its way lower to close near the lows of the day. This shift
in intraday sentiment again shows a big drop in fear. We have another CVR 3 sell
plus a CVR 6 sell. The VXN
(
$VXN.X |
Quote |
Chart |
News |
PowerRating) also gapped up opened near its highs and closed near
the midpoint of its range. This shift
in intraday sentiment also shows a drop in fear. Both volatility are showing
complacency in this market. Continue to tighten stops.

Points of Significance:

Volatility Index	Close	Net Change	Signals/Direction	% Above/Below 10 Day Moving Average	Significance
VIX	32.82	DOWN 0.25	CVR 3, 6 SELL	17.89 % Below	At Extreme
VXN	50.65	DOWN 0.59	CVR 3, 6 SELL	13.82 % Below	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
PloyMedica	PLMD	– 13.15	4189	555
Gap Inc.	GPS	– 10.30	4626	1209
Cabot Microelectronics	CCMP	+ 8.04	5222	1594
Prepaid Legal	PPD	+ 7.75	6775	2710
Echostar Communications	DISH	+ 8.29	3972	1713
McAfee.com	MCAF	+ 8.02	591	123

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
Meadwestvaco	MWV	65	34.2	34.3	26.5
Titan Corp.	TTN	111.6	96	103.8	46.8
Wells Fargo	WFC	31.9	27.7	35.7	17.6
Copart Inc.	CPRT	56.6	50.5	52.2	40.5
Sempra Energy	SRE	47.2	42.3	52.6	25
Bowater	BOW	48.3	43.6	45.2	26.5

Spike Down

Name	Symbol	IV	Previous IV	High IV	Low IV
TCF Financial	TCB	26.3	31.5	35.4	19.1
Websense	WBSN	88.7	103.3	124.9	64.6
DuPont Photomasks	DPMI	76.7	88.5	88	45.9
Dell Computer	DELL	44	50.2	66.1	38.3
NCO Group	NCOG	59.6	67.4	81.6	41.9
IMC Global	IGL	55.8	63.1	61.9	35.1

Please use stops on every trade!

Monday’s Options Alerts

BUY THE FEAR, SELL THE GREED

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