Schaeffer's Trading Floor Blog

Guidant Taking a Hit

by 6/24/2005 10:07 AM
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Guidant is taking it on the chin this morning after reporting that there is the possibility of failure in some of its cardiac defibrillators. The stock is currently down 10 percent in trading thus far, which is actually up 2.5 percent from where it opened around $60, seemingly finding support at that key level. The most active options strike for the stock happens to be the July 60 put. Any coincidence that the stock rallied off that level?

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A Weak Open

by 6/24/2005 9:53 AM
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Good morning! It's Friday! With Nick out again today other traders will leave the bench to pinch hit. The open was a little soft. Although futures were above sea level prior to the open, the market sold off some and is now trading near the lows of the session. Those expecting a bounce after yesterday's plunge are so far disappointed. The best performing sectors after 20 minutes are precious metals, oil service (which is still within a chip shot of an all-time high) and biotechnology. Bringing up the rear are computer disk drives, computer hardware and airlines. <

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Stocks quoted in this article:
Ugly is the best way to describe the action today. Oil poked its head above $60 a barrel right before 2:00 p.m. and it set off a barrage of sell orders. When the smoke had cleared the Dow lost 166 points. Still the big loser on the day was the Transports (TRAN: scorecard, quote, chart) as it lost 111 points or over three percent. Gold and energy were about the only things green on my screen, but even they succumbed to the strong afternoon sell-off. Also one very concerning bit of action from today is volume was very high, suggesting someone big was dumping. Now one big down day on huge volume isn't a reason to get out of all of your long positions, but man, I'll tell you what, this is a very fragile market right here.

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Some Dow(n) Statistics

by 6/23/2005 4:05 PM
Stocks quoted in this article:
Some Dow(n) facts for you - today is the first 100-point down day for the Dow Jones Industrial Average since May 12. There was only one other in May, on the 10th. April saw a number of 100-point down days for the Dow. April 13, 14, 15, 20, and 28 were all days where the Dow closed lower by 100 points or more. April 15 was the last time the index closed lower by more than today – it slipped 191 points that day. And April 20th marked the low close for the Dow. Over the following two months through yesterday's close, the Dow rose almost six percent. The difference? In April the Dow had dropped nearly 10- percent from early March to mid-April and the consecutive 100-point losses were something of a climactic selloff. It was also near support at the psychologically important 10,000 level then. That set the stage for the rally. Yesterday the Dow was near a three-month high and nearer to the top of its recent trading range than the bottom. That means there could be more room for further declines.

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Stocks quoted in this article:
Another stock that's on my bull list radar screen is NETGEAR (NTGR: scorecard, quote, chart) . For those of you who are unfamiliar, NTGR designs a range of wired and wireless networking equipment, including hubs, routers, switches, servers, and interfaces. These products are used for connecting personal computers in home and small business settings to each other. I've written about the stock in both the Daily Market Blog area and Timely Takes market observation portion of SchaeffersResearch.com. NTGR made a new 52-week high today before falling back amid the market weakness. Even so, as we enter the last hour of trading, the stock is down just over one percent. NTGR is a technical and fundamental outperformer with significant pessimism. This is just what we look for in a bullish candidate - pessimistic sentiment that runs counter to the fundamental and technical uptrend. Short interest is a whopping 20 percent of the stock's float and stands at an all-time high. I still think this one has gas left in the tank.


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