Schaeffer's Trading Floor Blog

Housing is Still Hot!

by 6/23/2005 2:43 PM
Stocks quoted in this article:
Mortgage rates are continuing to fall as long-term interest rates stay low. Over the past week the rate on a 30-year fixed mortgage averaged 5.57 percent, which was down from last week's 5.63 percent. Although many analysts have put all their energy into calling a housing bubble, it doesn't seem to want to pop. As long as pessimism toward the housing sector is widespread then the boom may very well continue. Schaeffer's equity scorecard echoes this view given that the housing sector stocks have an average reading of 6.125 and the real estate investment trusts have an average reading of 6.67.<

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CBOE Put/Call Ratio

by 6/23/2005 1:01 PM
Stocks quoted in this article:
The CBOE equity put/call ratio dipped back below the 0.6 mark yesterday for the first time since 6/10, and is threatening to turn the trend of the 21-day moving average of this indicator back to the downside. The lower the ratio goes, the more vulnerable the equity market could get to pullback. The only question is how low can it go?

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Stocks quoted in this article:
Here's something, I pointed out to the traders here on the floor regarding General Electric. (GE: scorecard, quote, chart) As the chart below shows, GE is getting squeezed by the tandem of its long-term 10-month moving average and its even longer-term 80-month moving average. It looks like it may be vulnerable to a drop. Today's weakness (GE hasn't been positive since the opening minutes of today's trading) on relatively good news from the company strengthens my bearish view. GE said today that it would reorganize some business units. The company also reiterated earnings guidance and reaffirmed a double-digit earnings growth rate "into 2006 and beyond." This might be an interesting long-term put play, especially if the recent weakness is confirmed by a drop below support at 35.

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I SPY Souped-Up Calls

by 6/23/2005 12:15 PM
Stocks quoted in this article:

S&P Depository Receipts (SPY: sentiment, chart, options) saw a notable propensity of July call positions in Wednesday's trading. As the chart below indicates, about 28,000 contracts were added on the July 120 call, while about 14,000 contracts translated into new open interest on the July 122 call strike. What's more, the 124 call saw the addition of 12,000 positions. In contrast, July put open-interest additions were dwarfed. The most excitement among the July puts yesterday was at the July 114 put, where 8,000 new contracts were added. Despite this disparity, however, the exchange-traded-fund's (ETF) Schaeffer's put/call open interest ratio (SOIR) dropped just from 1.87 to 1.79. Among the front three-months' series, there are roughly 923,000 open put positions compared to 515,000 open calls.


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Horton Goes to SPX

by 6/23/2005 11:04 AM
Stocks quoted in this article:

D.R. Horton (DHI: scorecard, quote, chart) is enjoying a nice pop this morning after Standard & Poor's announced last night that the stock will join the illustrious S&P 500 Index (SPX). The security will replace VERITAS Software (VRTS: scorecard, quote, chart) after the close of trading on a date still to be announced. VRTS has agreed to be acquired by Symantec (SYMC: scorecard, quote, chart) . Other homebuilders that currently compose the SPX are Centex (CTX: scorecard, quote, chart) , KB Home (KBH: scorecard, quote, chart) , and Pulte (PHM: scorecard, quote, chart) . At last check, DHI was up 2.14 percent, while the PHLX Housing Sector Index (HGX) was down 0.20 percent. Below I have included a chart of some of the returns of the equities mentioned above.

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