Wednesday’s Options Alerts

• June 11, 2002
• TradingMarkets Editors

In an early sign of strength, the
markets shrugged off Nokia’s
(
NOK |
Quote |
Chart |
News |
PowerRating) lowered revenue forecast and put in a
modest rally. However the markets reversed course and took a turn for the worse
by the early afternoon.

The Dow
(
$INDU |
Quote |
Chart |
News |
PowerRating) turn triple digit gains into
triple digit losses and looks like it’s breaking down from a head and shoulders.
The S&P
(
$SPX.X |
Quote |
Chart |
News |
PowerRating) dropped over 17 points or 1.66% and came within a
hair of last Thursday’s lows. Despite positive news coming from Nokia
(
NOK |
Quote |
Chart |
News |
PowerRating),
the Nasdaq dropped the hardest as it fell over 2% and is once again below the
1500 level.

Many sectors were in the red today as biotechs
(
$BTK.X |
Quote |
Chart |
News |
PowerRating),
drugs
(
$DRG.X |
Quote |
Chart |
News |
PowerRating) and semiconductors were the hardest hit. The only sectors
to escape the bloodshed were gold stocks
(
$XAU.X |
Quote |
Chart |
News |
PowerRating), healthcare
(
$HMO.X |
Quote |
Chart |
News |
PowerRating),
and REITS
(
$DJR.X |
Quote |
Chart |
News |
PowerRating). For more information on today’s action, please refer to
the
market
recap.

The VIX
(
$VIX.X |
Quote |
Chart |
News |
PowerRating) formed an key
reversal outside bar today. It opened slightly below its midpoint and closed
right on the highs of day. This shift
in intraday sentiment shows a big increase in fear. No CVR signals were triggered by
the VIX today. The VXN
(
$VXN.X |
Quote |
Chart |
News |
PowerRating) also opened near the midpoint of its
range and closed near the highs of the day. This shift in intraday sentiment
also shows an increase in fear. No CVRs were triggered by the VXN today. Fear is
back in a big way, a run to last September’s low could be likely.

Points of Significance:

IDEC Pharmaceuticals
(
IDPH |
Quote |
Chart |
News |
PowerRating)
dropped over 16% on over four times its average volume. The shares, which were one
of the Nasdaq’s biggest percent losers, were hammered as the company halted clinical
trials of an experimental drug on fears that subjects could suffer from blood
clots. IDEC was also hit with news that there’ll be a three month delay for
reimbursements for Medicare and Medicaid patients who took Zevalin. On its
weekly chart, IDEC is a failed ascending triangle.

Genentech
(
DNA |
Quote |
Chart |
News |
PowerRating)
dropped 8% on heavy volume. The shares fell after the company was ordered to pay
$300 million in royalties to the City of Hope National Medical Center. Last
year, Genentech’s income was only half of this amount. The shares have now
retraced nearly 100% of this past counter trend rally.

Wellpoint
(
WLP |
Quote |
Chart |
News |
PowerRating) gained over 7% on
over triple its average volume as health care insurance providers were one of
the few sectors to go green. The company came out and raised its 2002 earnings
forecast by $0.10. This was the second time that the company raised guidance.
Wellpoint’s rally also sparked a rally in Humana
(
HUM |
Quote |
Chart |
News |
PowerRating), Aetna
(
AET |
Quote |
Chart |
News |
PowerRating),
United Health Group
(
UNH |
Quote |
Chart |
News |
PowerRating), and Cigna
(
CI |
Quote |
Chart |
News |
PowerRating).

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!