Tuesday’s Options Alerts

• July 1, 2002
• TradingMarkets Editors

Stocks ended lower on this first trading
day of the third quarter as a barrel of negative news from the biotech sector
weighed heavily on the market. The major indices all came out of their short
countertrend rallies in a big way today as the Dow and S&P dropped
1.44% and 2.13% respectively. The Dow was helped out by a positive
pre-announcement from 3M
(
MMM |
Quote |
Chart |
News |
PowerRating). Meanwhile, the Nasdaq
(
$COMPX |
Quote |
Chart |
News |
PowerRating) was the
weakest index as it dropped over 4% on very heavy volume of over 3.3 billion
shares.

Internet
(
$DOT.X |
Quote |
Chart |
News |
PowerRating), biotechs
(
$BTK.X |
Quote |
Chart |
News |
PowerRating), airline
(
$XAL.X |
Quote |
Chart |
News |
PowerRating),
and hardware
(
$GHA.X |
Quote |
Chart |
News |
PowerRating) all sold off heavily today. Today’s only winners were
gold
(
$XAU.X |
Quote |
Chart |
News |
PowerRating) and homebuilders. On the economic front, the manufacturing
sector continued to grow for the fifth straight month. The ISM index increased
to 56.2% from May’s reading of 55.7%. However, construction fell 0.7% in May. Gold gained over 4%. For more information on today’s action, please refer to
the market
recap.

Volatility made a turnaround today
after heading lower for the last three sessions. The VIX
(
$VIX.X |
Quote |
Chart |
News |
PowerRating) opened
near its lows and closed near the highs of the day. This shift
in intraday sentiment again shows fear rising. Once again, no CVR signals were
triggered today. Despite the heavy sell-ff in the techs, the VXN ended
slightly lower today. The VXN
(
$VXN.X |
Quote |
Chart |
News |
PowerRating) opened near the midpoint of its
range and closed slightly below its open. This shift in intraday sentiment
shows a small drop in fear. No CVR signals were triggered by the VXN
either.

Points of Significance:

Amazon.com
(
AMZN |
Quote |
Chart |
News |
PowerRating) dropped over
16% on almost double its average volume. This came after a New York Times
article reported that the E-tailing giant will open an online apparel store.
Shares of Amazon have already taken out an intermediate term trendline last
week.

Computer Sciences
(
CSC |
Quote |
Chart |
News |
PowerRating)
dropped 12.80% today on more than double its average volume. The shares were
under selling pressure today as a negative Wall Street Journal article hinted at
possible accounting woes with their outsourcing contracts. The shares are
starting to break down from a head-and-shoulders pattern.

Enzon
(
ENZN |
Quote |
Chart |
News |
PowerRating) dropped 10% and fell
to a two-year low. The company announced today that they’ve reacquired the
rights to market and distribute an anti-leukemia drug.

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!