Schaeffer's Trading Floor Blog

Readers Respond - Semi-Bored

by 4/13/2005 10:58 AM
Stocks quoted in this article:

Frank says - "The semis seems to be an old game which is quite boring...lets go into the new semis the oil sector."

My response - Having traded through "the bubble", never would I have imagined that the semis would be called boring! I do agree that the group may not be hot money anymore, but I do think it is worth watching both for its impact on the COMP/NDX and because it is still a group watched by the Street.

However, the beauty of the blog is that we are not limited by space, (only my ability to babble) so we can talk about both. In early March, I posted a note on the oil group - Chart Chatter - XOI My-Oh-My - and looked at the longer-term chart of the group. Here is an updated version of that chart...


Created with SuperCharts by Omega Research

Here we see the same channel that highlights the majority of the uptrend along with the 20-week moving average (green line) helps me to define trends. I talked about how I use channels like this and ended that post by say that this chart shows how far the XOI could pull back and still be considered in a longer-term uptrend.

From a purely technical perspective, the XOI appears to still be consolidating the recent surge. As I have noted in the past, I am much more a fan of sideways consolidations versus sharp pullbacks so this appears encouraging.

The tough part is trying to forecast when this will break. When I was trading actively, I can not even count how many times, in retrospect, I regretted trying to pick the perfect spot.". At one point I had two notes taped to my screen that read:

  • Don't get too cute
  • You are not that smart

While that may seem harsh, it was good reminder that opportunities can be missed by trying to "out think" the market. Given the intraday noise that is present (think yesterday) it can be nearly impossible to pick a "perfect" point.

I should also point out that those notes taped to my monitor are not a good example of what you should do. They have a negative undertone and I now know (through experience) that it is important to keep a positive perspective.

But I have now drifted completely away from the original topic (my apologies) so I am going to pull data on some oil stocks to see what that shows...


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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 yesterday'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 by clicking here.

Company Yesterday's
Gain
Percent of Float
Sold Short
Yesterday's
Close
Today's
Return
USG Corporation (USG) 24.5 37.8 43.90 -6.70
Neurochem Inc (NRMX) 16.2 22.9 13.16 0.15
Bluegreen Corporation (BXG) 9.1 12.4 14.20 1.27
TiVo Inc. (TIVO) 9.0 38.0 6.16 -0.98
Geron Corporation (GERN) 7.4 14.3 6.37 -2.20
Openwave Systems Inc (OPWV) 6.9 13.9 12.35 2.03
Penn National Gaming, Inc. (PENN) 6.7 10.9 32.25 0.59
Nautilus Group, Inc. (The) (NLS) 5.5 24.7 25.31 -0.28
Meritage Corporation (MTH) 4.6 10.5 64.07 -0.86
eResearch Technology Inc. (ERES) 4.0 14.5 12.08 -0.08
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Chart Chatter - SMH

by 4/13/2005 9:57 AM
Stocks quoted in this article:

After reading them over...my comments below on the semis may not be clear so I thought a chart might help...


Created with SuperCharts by Omega Research

Here you can see the support zone we have been tracking. The SMH dipped below this zone yesterday morning and rallied back above it by the close. Today we see that the group is once again struggling to tread water. It is also worth noting that the peak put strike for April SMH puts is at 32.50, with more than 55,000 contracts.


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At the Open

by 4/13/2005 9:43 AM
Stocks quoted in this article:

The tickers are blinking and here is what I see...

For the most part, mild losses on the broad market indices...semis (which as we saw last night, failed to make it into positive territory) seem to be in a hurry to give back some of yesterday's "bounce off the lows"...commodity related groups are also weak...housing stocks (which I still want to dig into today) are giving back some of yesterday's strong gains...bonds and drugs are barely holding above breakeven...


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The Continuing AIG Saga

by 4/13/2005 9:24 AM
Stocks quoted in this article:

Yesterday I noted an article on American International Group (AIG) that discussed another potential accounting issue...while at the same time a brokerage house was reiterating their "buy" recommendation...and while Hank Greenberg was set to invoke his fifth amendment rights.

Today the chatter is all about how Hank Greenberg gave two billion dollars worth of AIG stock to his wife just before the accounting issues forced him out.

I made some cynical remarks yesterday so I will temper my comments today. Just keep these two points in mind

  • AIG is down 19 percent this year and down nearly 30 percent over the last year
  • According to Zacks, 14 of the 20 analysts (70 percent) rank the stock with a "buy" rating

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