Aon Corp. (AOC - 29-1/8) is a holding company that comprises a family of insurance brokerage, consulting, and insurance underwriting subsidiaries. Investors are reacting negatively to news that the company will take a laundry list of charges that will push earnings per share from 53 cents last year down to the 5-10 cents range. Estimates were for a rise in earnings per share to 58 cents.

Prior to today, the company had a corpulent market capitalization of about $10.7 billion which is now getting a second look. AOC is lower by 32 percent on seven million shares of volume versus average volume of about 700,000 shares per day. This may help to account for why the S&P Insurance Index (IUX - 595.69) and the PHLX KBW Banking Index (BKX - 726.91) are lower by 1.8 percent and 2.6 percent, respectively.
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Takeover + heavy short interest = rally. As we noted this morning in the Market Byte section, shares of other potential content providers had moved a notch higher in the minds of investors. Following the massive deal of America Online (AOL - 72-1/8) and Time Warner (TWX - 92-3/8), investors quickly turned to speculation about which company will next to be 'asked to the dance.' As noted, News Corp. (NWS - 44-9/16) and CBS Corp. (CBS - 58) fell into similar categories as TWX with respect to their access to potential web content. The short-interest ratio for each of these names is almost 13 and 5, respectively. Thus, the short sellers are now staring down the barrel of a changed industry landscape with sizable short positions outstanding. The short-interest ratio measures the number of days that it would take to repurchase the number of shares that are currently sold short based on the stock's average daily volume. Particularly in the case of NWS, this is a sizable amount of buying potential that is likely being prodded along by those investors that are buying NWS in hopes that it will benefit from interest in the sector. NWS is higher by 18 percent on the day, while CBS is 10 percent ahead of Friday's close.<
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It appears that an institution is trading Juniper Networks (JNPR - 321-1/2) for size. At 1:45 p.m. EST, a series of blocks amounting to 3.8 percent of the outstanding shares traded four dollars below the prevailing market price. There is no news to explain the heavy volume, which is about 3-1/2 times Friday's volume with an hour to go in today's session. The stock traded as high as 339 before turning lower. JNPR is now trading back below its 10-day and 20-day moving averages. <
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After a strong opening, crude oil futures turned southward unable to hold on to their gains. The February Crude Oil Futures contract (CL/G0 - $24.18/barrel) is currently trading lower by four cents for the day. Last Wednesday the contract closed below its 10-week moving average. The 20-week moving average, which has provided support during the rally in oil over the past year, currently resides at approximately $23.50/barrel. The PHLX Oil Service Sector Index (OSX - 83.70) is feeling the heat as oil prices move lower. The OSX is currently down almost three percent on the day.
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MBNA Corp. (KRB - 26-11/16) announced its fourth-quarter earnings results in the early afternoon, creeping past analysts' expectations by a penny per share. On a year-over-year basis, the company topped last year's earnings numbers by about 26 percent. The stock immediately shot up on this news but quickly settled back to earth; the shares are presently trading near the breakeven mark. The most-active option on KRB today is the February 25 put, which has seen 1,000 contracts change hands. This volume came across the tape in large blocks that traded about an hour after the earnings report. Prior to today, this strike boasted put open interest of only 264 contracts.
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