Schaeffer's Trading Floor Blog

Buying Spurts

by 6/2/2005 12:21 PM
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My alert for NYSE net ticks has been sporadically hitting all morning, but as you can see below, the action has been rather unexciting...


Chart Courtesy of Thomson/ILX

The SPX is pushing towards its highs of the day but with a low-to-high range of less than four points for the session, it appears some are sitting on the sidelines...perhaps due to tomorrow's "looming" employment report.

I am not sure the employment report deserves as much attention as it gets but given how investors are continually bombarded with comments about its imminent arrival, I can see how some might be reluctant to step in ahead of it. At some point the attention becomes somewhat self fulfilling so while I may not agree with it, I will respect it...


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In response to my post below on QUALCOMM (QCOM) Mark says - "I have been watching QCOM for a while. Another thing to add to your comments is that QCOM recently met resistance at $37.50 where the front month options had about 32,000 open calls and only about 7,000 open puts. The stock has now broken that resistance level. I think that after driving the price down below that level for a little while, the call sellers gave up and let it go. Just something else to think about."

He then followed up with - "One other thing about QCOM I forgot to mention is that it is the second highest weighted stock in the NDX 100 after MSFT. Therefore, its short-term strong uptrend has moved closely with that index."

My response - Good points to consider. Thanks for sharing them!


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And speaking of critical levels...The chart of the Semiconductor HOLDRS (SMH) just caught my eye...


Created with SuperCharts by Omega Research

The SMH has pushed into the area near 35 that we have been watching for some time. This area served as support in late-2003 and in May 2004. However, it was violated last July and has since served as resistance. It is also worth noting that the 35 strike is the site of peak call open interest for both the June and July series of options.

A successful push above this zone would be an impressive sign of strength...

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A Test for the Bulls

by 6/2/2005 10:52 AM
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At the open, I noted that networkers were among the strongest groups. I started to look into some of the networking names and QUALCOMM (QCOM) caught my eye...


Created with SuperCharts by Omega Research

The stock has been in a strong short-term uptrend but has now pushed into a critical area. This zone was support in the latter part of 2004 and has served as resistance in 2005. Given that that QCOM is the second highest weighted stock in the Goldman Sachs Networking Index Fund (IGN) I will be watching the action here at resistance to get a feel for how strong the bulls are.

I should also note that a check of QCOM's equity scorecard shows a rather anemic reading of just three (out of a possible ten) so it appears that short-term momentum is one of the few bright spots for this stock. In other words, there isn't much in the way of skeptical sentiment. However, through experience (rough experience I might add) I have learned to respect short-term momentum as it can feed on itself in the right environment.


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Another stock to keep an eye on is Chicos Fas (CHS) which is hitting a new annual high...and a new all-time high...on their same-store sales report.

This stock has been a strong performer and made Tuesday's short interest scan. I just checked its equity scorecard and found a relatively healthy reading of 8.5...


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