Thursday’s Options Alerts

• June 5, 2002
• TradingMarkets Editors

The markets put in a late-afternoon
rally and bounced from oversold conditions today after two days of selling. The
Dow
(
$INDU |
Quote |
Chart |
News |
PowerRating) and S&P
500
(
$SPX.X |
Quote |
Chart |
News |
PowerRating) both rallied nicely while the
Nasdaq
(
$COMPX |
Quote |
Chart |
News |
PowerRating) also rallied 1%, despite warnings from a couple of software
companies.

Top-performing sectors today were health care
(
$HMO.X |
Quote |
Chart |
News |
PowerRating) and broker dealers
(
$XBD.X |
Quote |
Chart |
News |
PowerRating),
which were helped by an upgrade of Merrill Lynch
(
MER |
Quote |
Chart |
News |
PowerRating). Meanwhile gold
issues put in their second day of declines after the commodity gave back over $6
after its recent stellar gains. On the economic front, the services sector is
showing signs of improvement as the ISM non-manufacturing index rose to 60.1%
from April’s reading of 55.3%. This was the highest reading since August of
2000. For more information on today’s action, please refer to
the market
recap.

Fear is subsiding after two big days
of gains. The VIX
(
$VIX.X |
Quote |
Chart |
News |
PowerRating) gapped down and opened
near its highs and closed near the lows of the day. This shift
in intraday sentiment shows a decrease in fear. Today’s action triggered CVR
II and CVR
6 buy signals. The VXN
(
$VXN.X |
Quote |
Chart |
News |
PowerRating) opened near the midpoint of its
range closed near the lows of the day. This shift in intraday sentiment also shows a
decrease in
fear. The VXN triggered a CVR
II buy signal. With the additional CVR buy signals today, we could see more
of a bounce tomorrow.

Points of Significance:

Oracle
(
ORCL |
Quote |
Chart |
News |
PowerRating) jumped over 10% on
heavy volume and helped sparked the late-afternoon rally. Oracle’s CEO Larry
Ellison said that the company “at least met its profit target
of 12 cents a share.” The company will formally announce results on June
18. The shares did spike up but ended the day right at its 20-day moving average
and its 50% retracement of its May 17 high.

PetsMart
(
PETM |
Quote |
Chart |
News |
PowerRating) gained 4.5% on
triple its average volume. The stock continued to run after posting better-than-first-quarter results yesterday. The July 17.50 calls are trading at a low
implied volatility.

Millennium Pharmaceuticals
(
MLNM |
Quote |
Chart |
News |
PowerRating)
gained almost 5% on more than double its average volume. The stock jumped
on the news that FDA gave two of its cancer drug “fast track” status,
meaning that the drugs can be reviewed in six months, compared with 12
months.

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!