The action among the sector indices is showing a decidedly different flavor when comparing the action of the five-day periods ahead of the current and previous Federal Open Market Committee meetings. In the past five sessions, the tone has been decidedly bearish among the sector indices with 6 of 27 indices in positive territory. The following are the top four performing indices over the past five days: the PHLX KBW Banking Index (BKX - 764.76), up 6.63 percent; the AMEX Pharmaceutical Index (DRG - 361.3), up 4.82 percent; the Morgan Stanley Healthcare Products Index (RXP - 839.2), up 2.52 percent; and the AMEX North American Telecom Index (XTC - 1543.38), up 1.40 percent. The four indices showing the most weakness over the past five days are: the AMEX Tobacco Index (TOBX - 60.92), down 4.37 percent; the AMEX Oil and Gas Index (XOI - 470.45), down 3.87 percent; the S&P Retail Index (RLX - 923.4), down 3.42 percent; and the AMEX Biotechnology Index (BTK - 438.51), down 3.37 percent.

The leaders and lagging groups heading into the last FOMC meeting were sharply different from the above performance. Many of the sector indices were higher for the five day period ended December 20 with 14 of 27 indices in positive territory. The following were the top four performing indices: the AMEX Computer Technology Index (XCI - 923.5), up 6.55 percent; the CBOE Automotive Index (AUX - 558.8), up 6.11 percent; the PHLX Semiconductor Index (SOX - 818.4), up 5.75 percent; and the AMEX Biotechnology Index (BTK - 438.01), up 3.59 percent. The four indices showing the most weakness were: the S&P Insurance Index (IUX - 558.8), down 5.91 percent; the PHLX KBW Banking Index (BKX - 764.2), down 5.34 percent; the CBOE Gaming Index (GAX - 235.17), down 3.09 percent; and the AMEX Pharmaceutical Index (DRG - 360.6), down 2.35 percent.<
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One of the most-active names on the options exchanges today is Associates First Capital (AFS - 19-7/8). Shortly before 1:30 p.m., over 10,000 contracts had traded on the March 20 call. Four large blocks have traded between the bid and the ask prices. Heading into today's session, open interest at this strike stood at only 2,220 contracts, indicating that most of today's volume is new positions. This is currently the most-active call on the AMEX and the second-most active call option on the CBOE. AFS is trading about three percent lower in early-afternoon activity.<
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This morning before the opening bell, auto giant Ford Motor (F - 49-3/16) announced an alliance with United Parcel Service (UPS - 58-1/2) to track vehicles in the distribution channel in order to alleviate supply problems. F shares initially moved higher on the news, traversing as high as 50-9/16. However, the good times were short-lived, and the stock is trading sharply lower, falling below its declining 10-day moving average and the 50 level. F's 20-month moving average, which has recently begun to decline, is now at approximately 54. In January, its 20-month moving average capped F's attempt to rally significantly above 55.<
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This morning, entertainment titan Time Warner (TWX - 81-15/16) announced fourth-quarter earnings of 20 cents per share, blowing past analysts' estimates by four cents. These figures showed nearly a 100-percent increase from last year's results. The stock is pressing higher on this news, trading over five percent in the black and inching beyond its 20-day moving average. The TWX options pit is abuzz with activity in the March put series. The March 80 put has seen over 6,000 contracts trade on open interest of 740. Meanwhile, the March 90 put, previously home to 1,262 contracts, has seen nearly 3,000 contracts swap hands. A number of large blocks have been executed as spread trades between the two options. These are among the most-active put options on the AMEX and the PHLX. <
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IDEC Pharmaceuticals (IDPH - 108-1/4) reported earnings that met the average analyst estimate of 15 cents per share, but it was to no avail. The stock has retreated sharply in early trading, posting an 18-percent loss thus far. This apparently was not up to the unspoken expectations of some analysts, with one brokerage firm already cutting its rating on IDPH today. The stock has a relatively pessimistic 6.5 short-interest ratio, which is balanced with 11 of 13 analysts rating the stock a "buy." The biotechnology sector as a whole continues to be generally pessimistic, with the Schaeffer's put/call open interest ratio (SOIR) holding near its annual high at 0.67.
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