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by 10/18/2000 10:25 AM
Stocks quoted in this article:
Ericsson Telephone (ERICY – 13-7/16) manufactures a variety of equipment for the telecommunications and networking industries, including mobile phones and modem apparatus. Yesterday morning, the company announced that it expects to post a 21-percent rise in profits for the third quarter. However, it was also noted that ERICY's mobile phone unit could see widened losses.

This news spurred a rash of options buying, most notably at the January 13-3/4 strike. Nearly 8,000 contracts traded on the January 13-3/4 put, while 6,000 contracts crossed the tape on the correlating call. Large block trades crossed the tape on both strikes shortly after 2:30 p.m. The blocks were not indicated as spreads but are almost certainly related given the similarity in volume and time. Nearly all of yesterday's volume translated into new open interest today.

In early morning trading, ERICY has sunk along with the rest of the market, sloughing off over five percent and enduring a bear gap at the open. The shares are now trading below all of their significant moving averages, including their 20-month trendline.
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by 10/18/2000 9:26 AM
Stocks quoted in this article:
As a follow-up to a Market Observation on Boeing (BA – 60-1/2), the blue-chip issue reported this morning that its third-quarter earnings came in at 72 cents per share, topping Street estimates by five cents per share. It was the sixth straight positive earnings surprise for the company, according to I/B/E/S International.

Ahead of this earnings announcement, the stock moved fractionally higher on Tuesday to post its third consecutive winning session. With today's expected move upward in response to this positive fundamental news, the shares could overtake their 20-day moving average, a trendline that has offered stingy overhead resistance for the past week and a half.


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by 10/18/2000 9:21 AM
Stocks quoted in this article:
Teradyne (TER – 25) plunged 27 percent on Tuesday to its lowest level since May 1999. Yesterday, the company reported third-quarter earnings of 84 cents per share, a penny ahead of estimates. However, the company warned that it would miss Street earnings expectations for the fourth quarter. This news prompted Merrill Lynch to downgrade the stock from "buy" to near-term "accumulate."

Since its all-time high in early May, the equity has come unraveled, falling over 78 percent to trade below all its key moving averages.

Despite TER's collapse yesterday, almost 2,800 contracts were added to the October 30 call. This in an aggressive bet since this option expires on Friday.
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by 10/18/2000 8:57 AM
Stocks quoted in this article:
The long awaited spin-off of biotechnology company Monsanto (MON – 20) raised $700 million in its initial public offering on Tuesday. This figure was somewhat less than the $735-$840 million range anticipated by the underwriter, Goldman Sachs. The company priced 35 million shares at $20 apiece, below the expected range of $21-to-$24 per share.

The pharmaceutical concern Pharmacia (PHA – 56-7/16) purchased MON in April. With the weakness in the broad markets, it had to be quite a task just to get the issue priced for market. The new issue could face a difficult day in today's trading.
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by 10/18/2000 8:48 AM
Stocks quoted in this article:
This morning, the Labor Department released the September Consumer Price Index results. Overall, consumer prices rose by 0.5 percent, up significantly from the 0.1-percent decline in August. The results were higher than expectations that called for a 0.4-percent rise in consumer prices. The core index, which excludes the volatile food and energy sectors, also came in above the 0.2-percent estimates with an advance of 0.3 percent.

This morning's news did not help the broader markets, which already looked to open substantially lower on earnings-related concerns. Currently, the December S&P 500 Index Futures contract (SP/Z0 - 1339.50) is lower by 20.70 points, indicating a drastically lower open. <
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