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by 10/17/2000 3:49 PM
Stocks quoted in this article:
The PHLX Forest and Paper Product Index (FPP - 235.82) has made yet another 52-week low in today's trading, its second in a row. The FPP has fallen on hard times and is in danger of falling below 216.15, its lowest level in five years. The FPP has fallen steadily since making its all time high of 401.19 in August 1999. The 41-percent drop has been guided by the index's 10-month moving average. The index has not managed a close above this long-term trendline since December 1999.

Interestingly, even with its abysmal performance, options players are optimistic on the sector. Schaeffer's put/call open interest ratio (SOIR) on the FPP is 0.37. There are nearly three times as many open calls in the first three-month option series as open puts. This overwhelming optimism nearly matches the low at the March bottom in the FPP. As in the spring, until option players begin to capitulate to the trend by buying puts instead of continuing to try to call a bottom by buying calls, the sector will not likely bottom. When option players began to capitulate in March, the SOIR rose from its low of 0.37 to the 0.80 area, fueling a 28-percent rise in the FPP over the next 10 weeks.
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by 10/17/2000 3:40 PM
Stocks quoted in this article:
According to the Commerce Department, business inventories at the factory, wholesale, and retail levels rose by 0.7 percent in August, up from an upwardly revised 0.4-percent advance in July. August's climb was the biggest since June.

Overall, business sales were higher in August by 0.5 percent. The rise in overall inventories was boosted by a hefty 1.4-percent rise in retail inventories, the largest increase since May.

A rise in inventories could spur a slowing in the economy down the road, as businesses would need to buy less goods to deliver on sales orders, especially if inventory buildup outpaces sales. The inventory-to-sales ratio, the measure of the length of time it would take for a business to draw down its inventory, rose to 1.34 in August, its highest since September 1999.
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by 10/17/2000 3:15 PM
Stocks quoted in this article:
IDEC Pharmaceuticals (IDPH 182-11/16) has surged to a new record high in response to company's positive earnings surprise. Yesterday evening after the close, the company reported third-quarter net income of 30 cents per share, a penny better than Street forecasts.

IDPH has turned in an impressive performance recently, more than tripling in value from its late-May lows to today's all-time best. With today's move, the equity muscled past the 176 area, a level that has capped the shares since late September.

Given the stock's robust technical health, optimism from the options crowd is understandable. Schaeffer's put/call open interest ratio (SOIR) stands at a low reading of 0.39. Calls continue to captivate options players today, as over 1,000 contracts have traded on the November 180 call on open interest of just 24 contracts. In contracts, put volume is listless so far today.
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by 10/17/2000 3:12 PM
Stocks quoted in this article:
Two weekly retail sales numbers released yesterday showed an increase in sales over the past few weeks.

The LJR Redbook report showed national retail sales rose 0.8 percent in the first two weeks of October, compared with the same period in September. Sales rose a seasonally-adjusted 4.1 percent from the same period in 1999.

The BTM report echoed the same sentiment. Their U.S. chain-store sales index rose 0.5 percent for the week ended October 14 on a seasonally adjusted comparable-store basis. The sales index was up 4.9 percent from the same period in 1999, compared to a 3.6-percent rise over 1999 in the previous week.

The news has not affected the downtrend in the S&P Retail Index (RLX 728.6), which is off almost three percent on the day and has lost about 18 percent since its September 12 close.
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by 10/17/2000 3:07 PM
Stocks quoted in this article:
The 30-year U.S. Treasury bond yield (TYX 5.756) now stands at its lowest level in more than a month.

Historically speaking, the long-bond yield is near the 5.60 level, a mark below which the TYX traded for only parts of seven months - from August 1998 to February 1999. That period mostly followed the bailout of the Long-Term Capital Management hedge fund, whose massive losses threatened the stability of the financial markets.

At that time, the TYX was driven down by the buying of the 30-year Treasury bond (as bond yields move oppposite to price movements), presumably a "flight to quality" - a safe haven for money in a time of great uncertainty.

The current rally in the long bond may be driven by the same type of buying, as the Nasdaq Composite (COMP 3201.8) is down nearly 18 percent from its September 20 close. During the same period, the TYX has fallen from 5.962.

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