Wednesday’s Options Alerts
It was a wild day
today as stocks reversed off an early morning rally and dug deeper into their
multi-year lows. However the indices then put in a solid rally to have their
first positive close in the past six sessions.
News
of President Bush’s injunction against the West Coast lockout got the ball
rolling as it gave retail issues a pop. Tech stocks also got a boost on news
that IBM is buying back its own shares. Techs ignored news that both Merrill
Lynch and Bear Stearns cut estimates for Cisco Systems
(
CSCO |
Quote |
Chart |
News |
PowerRating) and Lehman’s wary
outlook on a number of chip equipment makers.
At the
close, the Dow
(
$INDU |
Quote |
Chart |
News |
PowerRating) gained 78.44 points or 1.05%. The S&P
(
$SPX.X |
Quote |
Chart |
News |
PowerRating) gained
13.24 points or 1.68%. And the Nasdaq
(
$COMPX |
Quote |
Chart |
News |
PowerRating) gained 9.72 points or
0.86%. The weakest sectors of the day were: utilities
(
$UTY.X |
Quote |
Chart |
News |
PowerRating) down 4.69%, gold
[$XAU.X] down 3.98%, telecoms
(
$XTC.X |
Quote |
Chart |
News |
PowerRating) down 2.70%, and semiconductors
(
$SOX.X |
Quote |
Chart |
News |
PowerRating)
down 1.85%. Meanwhile, recently beaten up sectors were the strongest performers
today: retail
(
$RLX.X |
Quote |
Chart |
News |
PowerRating) up 4.67%, banks
(
$BIX.X |
Quote |
Chart |
News |
PowerRating) up 4.62%, and broker/dealers
(
$XBD.X |
Quote |
Chart |
News |
PowerRating)
up 4.58%.
Volatility backed off today after hitting a two-month high yesterday. The VIX
(
$VIX.X |
Quote |
Chart |
News |
PowerRating) gapped down, opened near its
midpoint, and closed near the lows of the day. This shift in intraday sentiment shows a
drop in fear.
Today’s action triggered CVR
2 and 6 buy signals. The VXN
(
$VXN.X |
Quote |
Chart |
News |
PowerRating) gapped up, opened near the
highs of its range and closed near its highs. This shift
in intraday sentiment also shows a rise in fear. Today’s action shows fear
rising to extreme levels — we could be near a much-needed bounce. It looks
like the market wants to bounce from these oversold conditions. But remember
that this is a bear market, so if you choose to play the long side, don’t
overstay your welcome.
Points of Significance:
| Volatility Index |
Close | Net Change |
Signals/Direction | % Above/Below 10 Day Moving Average |
Significance |
| VIX | 46.46 |
DOWN 3.06 |
CVR 2 & 6 Buy |
5.35% Above |
Not At Extreme |
| VXN | 61.16 |
DOWN 0.43 |
CVR I & 2 Buy |
3.78% 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 |
| Pepsico |
PEP |
+ 14.86 |
12944 |
2543 |
| Apollo Group |
APOL |
+ 9.35 |
2293 |
641 |
| Costco |
COST |
+ 8.22 |
3315 |
1281 |
| Alliant Techsystems |
ATK |
– 8.14 |
1063 |
276 |
| Northrop Grumman |
NOC |
– 5.51 |
10891 |
3235 |
| Ryland Group |
RYL |
+ 5.67 |
4796 |
997 |
Stocks With Biggest Spikes in Implied
Volatility — Stocks with biggest increases or decreases in implied
volatility compared to previous day
Spike Up
| Name | Symbol | IV | Previous IV |
High IV |
Low IV |
|
Texas Utilities
|
TXU |
120.09 |
80 |
61.6 |
17.3 |
| Dominion Resources |
D |
67.3 |
46.5 |
49.5 |
18.4 |
| Fossil |
FOSL |
93.1 |
64.5 |
60.5 |
36.8 |
| Sempra Energy |
SRE |
52.6 |
42 |
52.6 |
25 |
| Unilab |
ULAB |
68.6 |
54.9 |
76.5 |
29.1 |
| Pinnacle West Capital |
PNW |
88.4 |
71.2 |
56.8 |
17.1 |
Spike Down
| Name | Symbol | IV | Previous IV |
High IV |
Low IV |
|
Apollo Group
|
APOL |
49.1 |
64.5 |
58.3 |
34.3 |
| Pepsico |
PEP |
35.3 |
44 |
44.1 |
17.8 |
| Wachovia |
WB |
48.7 |
55.3 |
44 |
21.2 |
| Ryder Systems |
R |
46.5 |
52.8 |
51 |
30.1 |
| Concord EFS |
CEFT |
71.7 |
80.8 |
78.8 |
34.7 |
| Too Inc. |
TOO |
63.3 |
71.1 |
63.6 |
33.7 |
Please use stops on every trade!