Schaeffer's Midday Options Update Features Home Depot
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CINCINNATI, Aug. 19 /PRNewswire/ -- Today's Schaeffer's Midday Options Update features Home Depot (NYSE: HD), Lowe's (NYSE: LOW), Staples (Nasdaq: SPLS), Antigenics (Nasdaq: AGEN), Comcast (Nasdaq: CMCSK). The Midday Options Update contains a brief commentary on the day's most notable activity and a table listing the most active calls and puts for the day. The Midday Options Update is published every day at www.SchaeffersResearch.com - the home of Bernie Schaeffer and Schaeffer's Investment Research. For additional information about this report or to have it delivered to you free via email every day click on the following link. Each new subscriber will receive a FREE copy of Bernie Schaeffer's Options 101 CD-ROM (a $49.95 value). http://www.schaeffersresearch.com/addinfo.
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Schaeffer's Midday Options Update
Stocks are trading mixed as we head into the afternoon session. Early news of an explosion at the U.N. headquarters in Baghdad sent the major indices tumbling lower this morning. Since then, it's been an up-and-down day for the market as the bulls and bears play tug of war.
Retail giant Home Depot (NYSE: HD) posted second-quarter results a day after its biggest rival, Lowe's (NYSE: LOW). HD saw a profit of 56 cents per share that beat Wall Street's estimate by two pennies. Among other things, the company reported a 2.2-percent increase in same-store sales and reiterated its earnings growth target of between nine and 14 percent for fiscal year 2003. This follows strong results from LOW yesterday, which saw a quarterly profit of 75 cents per share that trumped the consensus estimate of 69 cents.
In other earnings news, shares of Staples (Nasdaq: SPLS) are trading sharply higher today after the company beat Wall Street's second-quarter view by two cents. The firm also said it expects 2003 earnings of $1.09 per share, higher than the $1.05 expected by most analysts. SPLS is up more than 10 percent on the news. Antigenics (Nasdaq: AGEN) is also trading higher today after reporting positive results from its cancer vaccine Oncophage. The stock is up nearly 15 percent in afternoon trading.
On the economic front, July housing starts increased by 1.5 percent versus the expected decline of 2.8 percent. The BTM-UBS Retail Sales Index fell 0.5 percent for the week ending August 16. This compares to last week's gain of 0.1 percent. Finally, the preliminary reading of the University of Michigan Consumer Sentiment Index fell to 90.2 versus the expected reading of 91.2. This data was originally scheduled for last Friday, only to be postponed due to the power outage in the Northeast.
At 1:29 p.m. eastern time, the Dow Jones Industrial Average (DJIA - 9399.6) is up 0.69 percent and the S&P 500 Index (SPX - 999.90) is up 0.01 percent. The Nasdaq Composite (COMP - 1751.6) is down 0.13 percent. At 1:30 p.m. in the options pits, 1,314,221 calls and 825,183 puts traded for a composite put/call ratio across all five exchanges of 0.61. The CBOE put/call ratio for equity options weighed in at 0.50.
Call activity is slowly building on Comcast (Nasdaq: CMCSK). Today finds the October 30 strike active, with more than 7,900 contracts changing hands. This type of activity has sent the Schaeffer's put/call open interest ratio plunging lower in recent days, from a reading of 0.74 on July 31 to its current reading of 0.53. Short sellers are also bailing out of positions, another sign of growing optimism that could have bearish implications from a contrarian point of view. The number of CMCSK shares sold short has declined 12 percent since March and more than 54 percent since September. Meanwhile, Wall Street is lined up in the bullish camp. Zacks reports that 10 of the 15 analysts who cover the shares rate them a "buy" or better. The remaining five rate them a "hold."
This type of optimism might seem well deserved if CMCSK was rallying to a new all-time high. However, the stock has actually declined more than 14 percent from its mid-June top, falling under pressure from its overhead 10-day and 20-day moving averages. The 28 level has offered a reasonable degree of support during this decline, but that support seems to be breaking down. What's more, CMCSK is poised for a bearish cross of its 10-week and 20-week moving averages. This is often a sign of continued weakness. The only concerns I have are the 27.50 level and the monthly chart. First, 27.50 coincides with peak put open interest in the September series, which could act as another layer of support. Second, the monthly chart shows a potential bullish cross of the 10- and 20-unit moving averages. A clean break below 27.50 will likely spark an unwinding of this optimistic sentiment, ultimately sending CMCSK lower.
Click the following link to see the Daily Chart of CMCSK since April 2003 with 10-Day and 20-Day Moving Averages: http://www.schaeffersresearch.com/wire?ID=8291 .
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About Schaeffer's Investment Research ( www.SchaeffersResearch.com )
Schaeffer's Investment Research, founded by Bernie Schaeffer in 1981, is a financial information and trading resources company. It publishes Bernie Schaeffer's Option Advisor, the nation's leading options subscription newsletter. The firm's contrarian approach focuses on stocks with technical and fundamental trends that run counter to investor expectations. The firm's website, http://www.SchaeffersResearch.com , is recognized as one of the leading information sources for stock and options traders and was cited as the top options website by both Forbes and Barron's. Click here for more details about Schaeffer's trading methodology: http://www.SchaeffersResearch.com/method .
Contact: Tom Godich at Schaeffer's, Phone: ; Email:
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