Schaeffer's Trading Floor Blog

Happy Friday

by 5/27/2005 8:40 AM
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Good Morning. Pulling into the parking lot today there were maybe half the number of cars that would usually be there at that time. So if that's any indication of how today's action will be expect a slow, low volume day. On the economic front this morning, personal spending came in a little light while personal income came in as expected. Futures didn't move much on the news, as they are still slightly in the green. Oil is up 31 cents, the dollar is down 0.20 points, gold is flat, and bonds a down just a little.

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A quick look at the S&P 500 Index (SPX – 1197.62) shows that nearly all of today's rally occurred in the first hour of trading. However, instead of pulling back the index held its gains into the close. I pointed out yesterday that after the winning streak the major market indices have had, the market didn't fall back much. I found that to be constructive, a sign of the market's strength. Today's rally confirms that. The SPX is now at its highest point since mid March. In fact, the SPX is not far from its March high of 1229.11. That was the index's highest point since August 2001, a month before terrorist attacks in New York.



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A review of the highest Schaeffer's Gold equity scorecard ratings shows only one stock with a 10 out of 10 rating – Metris Companies (MXT: scorecard, quote, chart) . Click on the tab to the right labeled "Special Tool Kit", then click on the link titled "High/Low Scorecards" to get this information. According to Hoovers, MXT markets its Direct Merchants Bank brand MasterCard credit cards to moderate-income customers throughout the US, including both secured and unsecured cards. It offered such add-ons as credit card registration, but sold most of these fee-based services to private UK firm CPP Group in 2003; its Enhancement Services segment now offers just credit protection and insurance. The company is facing a decrease in income, downgrades in debt ratings and a deterioration in its assets, all largely due to poor loan performance. Even so, the technical picture is positive. The stock has been trading steadily higher and is challenging its December high of 13.35. Pessimism is significant though. The stock's Schaeffer's put/call open interest ratio (SOIR) is higher than 81 percent of all SOIRs of the past year. MXT's short interest as a percentage of float is a large 21 percent. <

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Rally Time

by 5/26/2005 3:44 PM
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Well wouldn't you know it, as soon as you think all the traders left early for the three day weekend we get some action. Since 3:00 p.m. the SPX has gone up two points and is now at its highs for the day. Leading us higher are steel stocks, semiconductors, and housing. On the downside, metals, and medical supplies are underperforming.

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One stock that looks attractive from our contrarian-based methodology is Affymetrix (AFFX: scorecard, quote, chart) . The stock has been in a tight uptrend since mid-March. A look at a weekly chart reveals that the equity has actually been trending higher since mid-August of 2004. Despite its solid technical performance, there are signs of skepticism in its sentiment backdrop. Short sellers have made hefty bets against the security, as short interest accounts for more than 13 percent of its float. Financial analysts remain unimpressed as well. According to Zacks, there is one "buy" rating, five "hold" ratings, and one "sell" rating on AFFX, leaving plenty of room for upgrades or additional analyst coverage to boost the stock higher. Today, the stock is trading $1.35 higher to $53.58.

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