Friday’s Options Alerts

• August 1, 2002
• TradingMarkets Editors

Following
yesterday’s last-hour rally,
the major indices did not show any follow through
as the weak ISM numbers weighed heavily on the market. Also an earnings
miss from ExxonMobil
(
XOM |
Quote |
Chart |
News |
PowerRating) and a revenue warning from Adobe Systems
(
ADBE |
Quote |
Chart |
News |
PowerRating)

helped contributed to today’s sell-off.

At
the close, the Dow
(
$INDU |
Quote |
Chart |
News |
PowerRating) fell 230 points or 2.63%, the S&P 500
(
$SPX.X |
Quote |
Chart |
News |
PowerRating) broke its four-day win streak and dropped 27 points or just under
3%. Both indices appear to be coming out of their countertrend rallies. The Nasdaq was the weakest index as it
dropped 48.10 points or 3.6%.

Nearly every sector was in the red, with weakness
concentrating in oils
(
$XOI.X |
Quote |
Chart |
News |
PowerRating), chips
(
$SOX.X |
Quote |
Chart |
News |
PowerRating), telecoms
(
$XTC.X |
Quote |
Chart |
News |
PowerRating),
and software
(
$GSO.X |
Quote |
Chart |
News |
PowerRating). Only gold
(
$XAU.X |
Quote |
Chart |
News |
PowerRating) and health care
providers ended green today. The
July Supply Management Index dropped to 50.5% vs. expectations of 55.4,
June’s reading was 56.2%. This suggests that growth in the manufacturing sector
is lethargic and barely expanding. Initial jobless claims also came out today,
the numbers a little higher than expected, but initial claims are still
near a four-month low.

Volatility spiked higher today after
spending some time in the complacent investors’ zone. The VIX
(
$VIX.X |
Quote |
Chart |
News |
PowerRating) gapped
up, opened near
its lows, and closed near its highs, just under its 10-day moving average. This shift
in intraday sentiment again shows a big jump in fear. No more CVRs were
triggered today. The VXN
(
$VXN.X |
Quote |
Chart |
News |
PowerRating) also gapped up, opened near its lows,
and closed near the highs of the day. This shift
in intraday sentiment shows an increase in fear. The VXN didn’t trigger any
CVRs either.

Points of Significance:

Open Text
(
OTEX |
Quote |
Chart |
News |
PowerRating) jumped 14% on more than triple its average
volume. The management software company reported results fourth quarter results
that beat estimates by three cents. Open Text also said they were comfortable
with guidance for next year. However the shares did find resistance at its 61.8
retracement level from its May 17th high.

Murphy Oil
(
MUR |
Quote |
Chart |
News |
PowerRating) fell 4.7% on more than triple its average
volume. The shares are looking to fill its gap after hitting resistance
yesterday.

Volatility Index	Close	Net Change	Signals/Direction	% Above/Below 10 Day Moving Average	Significance
VIX	41.49	UP 6.28	NONE	0.08 % Above	Not at Extreme
VXN	60.35	UP 2.49	NONE	3.47% Below	Near Extreme

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

Name	Symbol	Net % Change	Volume	Avg. Volume
Adobe Systems	ADBE	– 29.75	2259	775
Open Text	OTEX	+ 14.14	4230	531
Advanced PCS	ADVP	– 13.64	3203	571
Murphy Oil	MUR	– 5.70	599	276
Abercrombie & Fitch	ANF	– 4.95	4410	1415
Wal-Mart	WMT	– 3.61	10553	745

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
Peoples Energy	PGL	44.4	32.7	35.5	19.4
Abercrombie & Fitch	ANF	90.7	68.3	65.6	43.5
Moody’s Corp.	MCO	45.6	35.6	43	22.4
Amsouth Bancorp	ASO	31	24.8	29.5	19.3
Advanced PCS	ADVP	76.2	62.9	67.3	40.5
Claire’s Stores	CLE	45	37.4	37.2	27.3

Spike Down

Name	Symbol	IV	Previous IV	High IV	Low IV
Newell Rubbermaid	NWL	32	41.3	43.4	23.1
Profit Recovery	PRGX	68	85.3	73.6	42.4
Host Marriot	HMT	52.7	66.1	58.1	26.7
American Water Works	AWK	12.8	15.7	14.1	8.7
Cinergy	CIN	37.5	43.7	59.1	16.5

Please use stops on every trade!