Schaeffer's Trading Floor Blog

Index Returns

by 5/16/2005 2:57 PM
Stocks quoted in this article:

Here is where the indices stand as we head into the final hour of the session...

Overall it looks like there is a positive bias as most groups are showing gains on the day. The exceptions would be oil and gold related concerns....


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I Am Back

by 5/16/2005 2:46 PM
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I was finally able to get back to my desk and am now looking around to see what is happening with the market...


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More on the OIH

by 5/16/2005 1:19 PM
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As Kristin mentioned earlier, the 85 level is home to a good deal of put open interest for the Oil Service HOLDRS Trust (OIH). Since the time of her blog though, the ETF has bottomed at $84.16 and found some buyers, as it is clear up to $85.55 two hours later. Sure, it's still slightly negative for the day, but keep your eyes on how it finishes. Should it be able to move into the green and volume come in strong, then we could have confirmation that the $85 level indeed might hold as short-term support.<

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Martha Begins to Perk Up

by 5/16/2005 12:36 PM
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One stock I'm stalking recently is Martha Stewart Living Omnimedia (MSO: scorecard, quote, chart) . While the company's namesake was in the clink, the stock rallied sharply, hitting a four-year high of 37.45 on February 23. However, the company reported less-than-stellar earnings that morning and that was the beginning of the end. The miss was blamed on a sharp drop in advertising revenue. It didn't help that the company's earnings guidance was below Wall Street's estimate. By the time Martha was back at her palatial estate, her stock had already begun to crack. The day before her release from prison it fell nine percent and followed up with another nine percent drop on March 5, the day of her release. Before it was all said and done, the stock had found support near 20, more than 45 percent off the high. Since announcing very good ad sales on May 5, the stock has rallied more than 27 percent. My bullish bias is bolstered by growing pessimism on the company. Both the Schaeffer's put/call open interest ratio and short interest are rising. In fact, short interest is a monstrous 84.9 percent of the stock's float. Short covering could explain the recent move higher.

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The Oil Service HOLDRS Trust (OIH: scorecard, quote, chart) , an exchange-traded fund that represents a collection of oil service stocks, has been in quite a tailspin month or so, declining from its highs in early April of $99.50 to its current value of $84.82. One thing we typically examine to find areas of potential support and resistance for equities is options open interest. Although the shares fell through the 90.00 level, which is the peak open interest area for May, the 85.00 level is also home to a significant number of puts, with nearly 12,000 contracts of open interest. Market players should keep a close eye on 85.00 to see if the shares can hold support at this level. <

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