Tuesday’s Options Alerts

• July 15, 2002
• TradingMarkets Editors

The major
averages were looking to
start this week’s trading on a very negative note on news of more accounting
woes and the plunging dollar. However, the averages staged a dramatic recovery
during the final hour of trading. At one point, the Dow plunged over 440 points
or almost 5%,  the second biggest intraday drop since last September. By
the close, the Dow was only off 45.34 or 0.52%. The index which had been
strongest in recent times came within 182 points of its September lows.

The
S&P 500
(
$SPX.X |
Quote |
Chart |
News |
PowerRating) was down almost 45 points or 4.8% before finishing
the day down just 3.52 points or 0.38%. On the other hand the Nasdaq
(
COMPX |
Quote |
Chart |
News |
PowerRating)
was the strongest today as it finished up 8.70 points or 0.63%, thanks in part
to semiconductors
(
$SOX.X |
Quote |
Chart |
News |
PowerRating) and
(
$GIP.X |
Quote |
Chart |
News |
PowerRating) networking issues.

Adding
to the ever growing list of companies with accounting scandals today is
Haliburton
(
HAL |
Quote |
Chart |
News |
PowerRating). Greenspan will testify on the economy both tomorrow and
Wednesday. Lastly, a plethora of companies will be releasing second-quarter
results this week, including a number of Dow companies. For more information on today’s action, please refer to
the market
recap.

The VIX
(
$VIX.X |
Quote |
Chart |
News |
PowerRating) gapped up at
the open, ran to levels not see since late September, then reversed and
closed just underneath its open. This shift
in intraday sentiment again shows a big decrease in fear. Today’s action
triggered CVR 1, 3, 5, and 6 buy signals. The action in the VXN
(
$VXN.X |
Quote |
Chart |
News |
PowerRating)
wasn’t quite as dramatic as the VIX. It gapped open higher, ran up, then closed
slightly above its open. This shift in intraday sentiment
also shows a increase in fear. The VXN didn’t trigger any signals today. We were
in very oversold conditions going into today, due to the strong intraday
reversal today. Further bounce is likely, but don’t overstay your welcome as the
previous bounces were more than a day or two.

Points of Significance:

Ballard Power Systems
(
BLDP |
Quote |
Chart |
News |
PowerRating)
dropped over 20% on
more than five times its average volume.
The shares were under pressure today after a Barrons article questioned
the company’s valuation. The shares dropped to a five-year low. The stock is
also breaking down from a descending triangle. The implied volatilities on its
options are high, therefore consider using a bear spread instead of an outright
option purchase.

Altera Semiconductor
(
ALTR |
Quote |
Chart |
News |
PowerRating)
gained more than 5.5% on about average volume. Altera along with many other
semiconductor issues showed good resiliency, up as the market plunged
in the morning. Today’s action help the semiconductor index pop back above its
20-day moving average. However there is resistance ahead at the 403 level.

Volatility Index	Close	Net Change	Signals/Direction	% Above/Below 10 Day Moving Average	Significance
VIX	39.30	UP 0.97	CVR 1, 3, 5, 6 BUYS	12.77% Above	At Extreme
VXN	67.85	UP 1.85	NONE	8.94 % Above	Not 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
Ballard Power Systems	BLDP	– 20.48	3972	463
Pharmaceutical Product Development	PPDI	– 13.39	2192	443
J.B. Hunt	JBHT	– 10.67	1487	215
Nautilus	NLS	– 6.10	7689	1222
Lockheed Martin	LMT	– 5.85	7115	2314
Altera Semiconductor	ALTR	+ 5.57	8426	1383

Stocks With Biggest Spikes in Implied
Volatility — Stocks with biggest increases or decreases in implied
volatility compared to previous day

Spike Up

Spike Down

Name	Symbol	IV	Previous IV	High IV	Low IV
IDEXX Laboratories	IDXX	42	50.2	44.7	31.6
Charted Semiconductor	CHRT	57.9	69.1	59.8	46.6

Please use stops on every trade!