Schaeffer's Trading Floor Blog

Sneak Preview

by 5/10/2005 11:50 AM
Stocks quoted in this article:

I am working on my weekly column for the homepage and thought you might like a sneak preview...I am looking into Amdocs Ltd (DOX) which is a software and programming concern. As you can see in the bullets below, the shares have little in the way of overt pessimism.

  • Percent of analysts tracked by Zacks who rate the stock with a "buy": 82%
  • Number of analysts tracked by Zacks: 17
  • Short interest as a percent of float: 1.2%
  • Short interest ratio: 1.965
  • Put/call ratio percent rank: 50.0%

While a quick check of the chart shows the shares have recently broken out of an uptrend....


Created with SuperCharts by Omega Research

But perhaps the most interesting aspect is that the Street has become quite bullish since the beginning of the year as you can see in this monthly snapshot of ratings from Zacks....

The full commentary will posted on the homepage this afternoon, but you have already seen the "meat" of the argument. The bottom line is - should the shares fail to pick up here, these "recent" bulls may turn and run...


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Readers Respond - Risk

by 5/10/2005 11:28 AM
Stocks quoted in this article:

In response to the post below on hedge funds, Sharlee says - "I just heard the story repeated on CNBC that a hedge fund might be in trouble. For three years I have reported that something like that would be the beginning of the end of stock market trading as we know it. There are about 2500 stocks on the NYSE but there are 4000 mutual funds and about 8000 hedge funds, most of which are chasing those 2500 stocks. It is estimated that funds of all kind own about 85% of the 16 Trillion Dollar market. If any small part of 16 Trillion Dollars were put up for sale and fund cash levels are at decade lows, who could and who would stand in the way of a crash ?"

My response - I don't have the figures to confirm the numbers above, but I do believe that hedge funds, through their sheer number and leverage employed, control a good deal of the volume. It is hard to say when (or even if) there will be a problem, but I do think it is something to keep in mind as forced selling could be "contagious".

I know that some will not agree that this is a risk to consider and I respect that. I just wanted to bring it up as a point to ponder on risk. Of course, I still think one of the best recent discussions of risk was in Bernie's April Option Advisor Commentary - ": Tiptoe Through the Tulips" - where he discussed ways to avoid "blowing up"...


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Readers Respond - Trouble?

by 5/10/2005 10:28 AM
Stocks quoted in this article:

A reader asks - "Have you heard anything about a hedge fund being in trouble?"

My response - In my post earlier I made reference to a rumor and that is what I was talking about. I have seen various versions floating around but the general idea seems to be that a large hedge fund is in trouble and selling.

While this rumor could turn out to be true, I should point out that this is not the first time it has surfaced. In other words, this rumor seems to bubble-up whenever we see weakness.

I can't say whether or not this is the reason for today's weakness. But given how the major indices are having trouble with the resistance shown below, I would keep a wary eye on any weakness...


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Stocks quoted in this article:

The major indices appear to be holding near their lows so I thought I would take the opportunity to update the daily charts we have tracking...

Created with SuperCharts by Omega Research

All-in-all, not too much has changed since we last discussed these graphs. The SPX is still holding above that resistance zone but has yet to breach the 50-day moving average. Meanwhile, the other three indices continue to struggle with resistance.


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Stocks quoted in this article:

As usual, this table lists stocks that have at least 10 percent of their float sold short and then shows the top ten based on the previous day's gain. The last field shows how the stock is performing in today's session. This can be a useful tool for finding situations where stocks with heavy short interest have begun to move. All returns are shown in percentages.

Note - more information on short interest can be found by clicking here.

Company Yesterday's
Gain
Percent of Float
Sold Short
Yesterday's
Close
Today's
Return
AtheroGenics, Inc. (AGIX) 16.5 26.4 15.84 -4.86
TASER International, Inc. (TASR) 15.9 31.7 10.94 -2.47
Cell Genesys, Inc. (CEGE) 7.7 14.4 6.16 -0.98
Great Atlantic & Pacific Tea Company, Inc. (The) (GAP) 7.3 41.9 18.27 19.87
West Marine, Inc. (WMAR) 6.3 25.8 17.24 -0.82
Career Education Corporation (CECO) 6.2 11.0 32.70 0.58
Hudson Highland Group, Inc. (HHGP) 5.8 17.5 15.71 0.13
TeleTech Holdings, Inc. (TTEC) 5.8 16.6 8.07 -0.63
Alexion Pharmaceuticals, Inc. (ALXN) 5.6 12.5 23.08 0.04
eCollege.com (ECLG) 5.4 18.0 11.07 0.09

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