Thursday’s Options Alerts

• February 27, 2002
• TradingMarkets Editors

The early morning rally fizzled by late afternoon. Despite
Greenspan’s cautiously optimistic testimony stocks gave up solid gains and
reversed to closed mixed. The DOW
(
$INDU |
Quote |
Chart |
News |
PowerRating) and S&P
(
$SPX |
Quote |
Chart |
News |
PowerRating) remained
slightly positive while the Nasdaq
(
$COMPX |
Quote |
Chart |
News |
PowerRating) finished in the red due to a
negative comment about Cisco systems
(
CSCO |
Quote |
Chart |
News |
PowerRating). Greenspan’s
testimony was the biggest news of the day as the Fed chairman hinted that the
recesssion which began last March is over and that a moderate recovery was
underway.  Meanwhile economic data was mixed as durable goods surpassed
expectations while new home sales plunged.  For more information on today’s action, please refer to
the market
recap.

The VIX
(
$VIX.X |
Quote |
Chart |
News |
PowerRating) opened and closed near
the middle of its range. The shift in intraday
sentiment suggests that fear is increasing. No CVR signals were triggered today.
The VXN
(
$VXN.X |
Quote |
Chart |
News |
PowerRating) opened near the mid-point of its range and closed
slightly above the open.
This intraday shift in sentiment also suggests that fear is increasing. The VXN did not trigger any CVR
signals either. Take caution as the VIX is again heading towards its lows.

Points of Significance:

Shares of retailer Gap
(
GPS |
Quote |
Chart |
News |
PowerRating)
dropped 8.5% on five times its average volume. Late Tuesday, the company
reported fourth quarter earnings that were down 34% from a year ago. This marks
two consecutive years of declining earnings. Gap CEO Mickey Drexler vowed that
Gap will “go back to basics” and stock their stores with items that
defined the Gap and made them a success. The stock is trading in a head and
shoulders top. 

Natural gas equipment maker Hanover
Compressor
(
HC |
Quote |
Chart |
News |
PowerRating)gained almost 7% on over double its average volume today. The
company have been under pressure recently as it will restate its earnings for
the last two years and it also cut its outlook for the year. The shares are
continuing to stage a counter trend rally, but today failed to close above its
.382 retracement level from the December 26th, 2001 high.

Kinder Morgan Inc.
(
KMI |
Quote |
Chart |
News |
PowerRating) dropped
6% on over five times its average volume. The shares are starting to break down
from a head & shoulders top pattern. There is heavy activity in the March
and April 45 puts. Its implied volatility is on the high side. 

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!