Long-term Equity AnticiPation Securities, more commonly referred to as LEAPS, are call and put options with up to three years' worth of shelf life. LEAPS are fundamentally the same as standard stock options; they just have longer-term expiration dates. Generally speaking, whatever you can do with a front-month option, you can do with LEAPS -- whether that's hedging, speculating, or generating income.

If you're long-term bullish on a stock's prospects, LEAPS can be a worthwhile investing alternative to buying the shares outright. While you won't be eligible for shareholder benefits, such as dividends and voting rights, LEAPS offer a limited risk profile and leveraged profit potential as compared to stock ownership.

Plus, compared to short-term calls and puts, LEAPS afford more time for a stock's move to develop in your favor. They also suffer less from time decay, which occurs relatively slowly on these long-term contracts. Since time decay doesn't really accelerate until expiration draws closer, option buyers may prefer to use LEAPS to play intermediate-term directional moves.

Due to the lessened impact of time decay, LEAPS tend to have high deltas, which means they behave very much like the underlying stock. This ramps up the benefits of leverage in your favor.

That said, it's important not to be lulled into a false sense of security by the healthy dose of time value bundled up in a LEAPS option. If a trade is breaking down or otherwise not performing up to expectations, don't reassure yourself that it has time to recover. Instead, you might be better off closing out the trade before time decay has a chance to kick in and erode any remaining value on the position.

Overall, LEAPS offer a happy medium between aggressive short-term option plays and traditional buy-and-hold stock ownership. LEAPS aren't available on every optionable stock, but you may want to consider adding some of these longer-term positions to your portfolio when the right opportunity arises.

One of the most popular patterns used by technical traders is the head-and-shoulders (H&S) formation. The pattern is fairly easy to describe. A stock (or other investment vehicle) will first peak and then decline to an area known as the neckline, forming the first (or left) shoulder. It will then bounce from the neckline to an even higher peak -- the head -- before returning to the neckline. Then, the equity will rally to another peak (but lower than the head) and subsequently return to the neckline, forming the second (or right) shoulder. At this point, the stock may be vulnerable to a sharp break south of the neckline.

As you can see on the chart above, this is a bearish pattern. However, there is a bullish equivalent called the inverse H&S -- just imagine the chart above turned upside-down.

Of course, there's plenty more to say on the H&S. To help flesh out the intricacies of this technical pattern, I asked Schaeffer's Senior VP of Research Todd Salamone for his thoughts on how to trade the H&S.

• There's oftentimes noise when attempting to discern an H&S pattern. At what point would you consider an H&S pattern to be "confirmed"?
  
  In a head-and-shoulders pattern, there is a neckline that is defined by a level that has held at least two times on pullbacks, otherwise known as support. In an inverse head-and-shoulders pattern, the neckline would be a resistance level. I look for confirmation when the neckline, or support/resistance, is finally broken.
  
  I prefer to see volume on the neckline break as healthy -- not climactic, but not extremely low either. If volume is suspect, I will look for a re-test of the former support/resistance level, known as a "throwback" move. During a "throwback" move, I am looking for a  successful hold of the support or resistance level. Finally, necklines can be slanted (see chart above) or flat. Slanted necklines will have three or more low or high points within the pattern in which you can draw a straight line. 

• What are the risks when trying to trade an H&S?
  
  As a trader with a contrarian mindset, I think one of the biggest risks that I've observed over the years with respect to a head-and-shoulders pattern -- and this would apply to all popular technical patterns -- is getting into a crowded trade when the pattern is obvious to everyone. I will monitor news and social media to get a hint as to whether or not a developing pattern is on the radar of multiple or only a few traders.
  
  Since the head-and-shoulders pattern is well-known by most technical traders, I have noticed that when the crowd has a cautious tilt on a widely followed asset, they will more easily see and possibly act on a bearish head-and-shoulders patterns. Moreover, I have observed that they are less apt to identify and act upon a bullish inverse head-and-shoulders pattern when that same cautious mindset is prevalent.
  
  Therefore, the risk is getting into a crowded short trade that might, at best, work well for a few hours or a few days -- but get wiped out in the blink of an eye. At worst, the asset immediately reverses back above the level that was breached, immediately generating short covering -- particularly in gap situations when stop-losses get triggered.

• Is there any way to predict the magnitude of a stock move following an H&S?
  
  The typical target is measuring the distance from the head to the neckline. The neckline plus (or minus) this distance establishes your target. This target is a guideline, though, not an absolute.

• Late last year, you highlighted a potential inverse H&S for the S&P MidCap 400 Index (MID). Did that materialize?
  
  Yes, I pointed out the potential for an inverse head-and-shoulders pattern in December 2014. By the way, this is something that no one was talking about in social media or other media.
  
  A pullback to 1,270 (the head) in October 2014 was sandwiched between two other pullbacks (the shoulders) to the 1,370-1,380 area that occurred in August and December. In early 2015, the pattern materialized when the MID broke above its 2014 highs (the neckline) in the 1,450 area. The target for this pattern is 180 points (neckline minus head) above the neckline, or 1,630. 

• Have you or others noticed any potential H&S patterns among the major indexes or big-name stocks?
  
  The S&P 500 Index (SPX) presents an interesting situation. In late June, a potentially bearish head-and-shoulders pattern was being observed by many technicians with the May highs in the 2,135 area sandwiched between prior highs around 2,125 in April and late June. The neckline was in the 2,070 zone, creating a target objective of 2,005. The neckline was broken in late June, with the SPX subsequently moving down to 2,040 on July 8, before a snap-back rally back above 2,100 and above the neckline.   
  
  As I mentioned before, the fact that this pattern was observed by so many made establishing a short a risky trade, as the SPX made only a minimal move toward its target objective before reversing and moving back above the neckline, perhaps sparking short covering. A pullback to the neckline would be interesting, as this would set up another potential bullish inverse head-and-shoulders pattern. My bet is that predisposed cautious traders will fail to recognize and/or act on such a pattern if it materializes, making it a safer pattern to trade because it isn't so crowded.

Second-quarter earnings season is heating up -- with both Intel Corporation (NASDAQ:INTC) and eBay Inc (NASDAQ:EBAY) making moves in the wake of their quarterly results. Looking ahead, toy titan Mattel, Inc. (NASDAQ:MAT), blue chip General Electric Company (NYSE:GE), and aerospace issue Honeywell International Inc. (NYSE:HON) are all on deck to report earnings. Below, we'll take the pre-earnings temperature of MAT, GE, and HON.

• MAT will join Advanced Micro Devices, Inc. (NASDAQ:AMD) on the earnings stage after tonight's close, and following its last eight quarterly showings, the stock has averaged a single-session swing of 4.5% -- the majority of which have occurred to the downside. This time around, the options market is pricing in a bigger 5.4% move, based on MAT's near-term at-the-money (ATM) straddle. Longer term, the stock has been a technical laggard, off 17.8% year-to-date to trade at $25.42. Option traders have kept the faith, though, and at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), Mattel, Inc.'s 50-day call/put volume ratio of 1.59 ranks in the 96th annual percentile. Meanwhile, those purchasing the equity's near-term options are paying relatively inflated prices, considering MAT's 30-day ATM implied volatility (IV) of 27.9% rests higher than 67% of all similar readings taken in the past year.


• GE -- which has been making a string of headlines this month -- will tell all in the earnings confessional bright and early tomorrow morning. Ahead of the event, the stock is up 0.4% at $26.88 -- bringing its year-to-date gain to 6.4%. For tomorrow's trading, the options market is expecting the stock to post a single-day move of 2.1% -- roughly in line with what GE has averaged over the past eight quarters in the session subsequent to reporting -- per its near-term ATM straddle. In the options pits, short-term speculators are more call-skewed than usual, as evidenced by General Electric Company's Schaeffer's put/call open interest ratio (SOIR) of 0.73, which ranks in the 36th annual percentile. Premium on the equity's near-term options is pricing in slightly higher volatility than normal -- GE's 30-day ATM IV of 15.9% sits above 56% of all similar readings taken over the last 12 months.


• HON will also unveil earnings tomorrow morning, and, according to its near-term ATM straddle, is expected to move 2.6% in the wake of reporting. This is slightly more than the 2.3% single-session post-earnings move HON has averaged over the past eight quarters. Since hitting an annual low of $82.89 in mid-October, the security has been charting a path steadily higher -- up 25.3% at $103.84, and closing in on its May 18 all-time high of $107.10. Put players, meanwhile, haven't been buying the uptrend. In fact, at the ISE, CBOE, and PHLX, Honeywell International Inc.'s 10-day put/call volume ratio of 2.69 ranks in the 98th percentile of its annual range. In other words, puts have been bought to open over calls with more rapidity just 2% of the time within the past year. A capitulation among these skeptics could result in tailwinds. Meanwhile, premium on the stock's short-term options is relatively tame at the moment, per its 30-day ATM IV of 17.2%, which rests above 59% of all comparable readings taken in the past year.

The new kids on the block, Ollie's Bargain Outlet Holdings Inc (NASDAQ:OLLI) and ProNAi Therapeutics Inc (NASDAQ:DNAI), are having a fine debut session thus far. The former is a Pennsylvania-based discount retailer, the latter a Michigan-based oncology firm; both went public on the Nasdaq today. 

OLLI priced its shares at $16 apiece -- above the expected $13-to-$15 area -- and opened at $22.68. The shares were last seen at $21.15, marking a 32.2% jump from their IPO price.

DNAI priced its IPO at $17, and opened at an impressive $28.68. What's more, the stock touched an intraday peak of $33.75 -- nearly twice its IPO price -- and was last seen lingering around $30.77. 

Could either of these stocks be the next Fitbit Inc (NYSE:FIT)? The fitness device maker has more than doubled from its mid-June IPO price of $20, and just yesterday tagged a record high of $48.98. At last check, FIT was fractionally lower at $47.24. Or will they be the next TransUnion (NYSE:TRU)? Shares of the credit bureau started off strong, but have eased lower since their late-June debut.

Analysts are weighing in today on online retailer Amazon.com, Inc. (NASDAQ:AMZN), social networking site LinkedIn Corp (NYSE:LNKD), and Internet auction house eBay Inc (NASDAQ:EBAY). Here's a quick roundup of today's bullish brokerage notes on AMZN, LNKD, and EBAY.

• AMZN has gotten off on the right foot this "Prime Day" morning, receiving a $55 price-target hike to $505 (uncharted territory for the stock) from Monness Crespi Hardt. The bullish note could allow the shares to add to their year-to-date lead of 50%, as of Tuesday's close at $465.57. There's potential for more positive analyst attention, too. Thirteen of 28 brokerages still consider Amazon.com, Inc. worthy of just a "hold" rating. Plus, the stock's consensus 12-month price target of $473.53 stands at a slim 1.7% premium to current trading levels.


• Barclays upgraded its opinion of LNKD to "overweight" from "equal weight," and raised its price target to $250 from $225, commenting that the issues that plagued the company's first-quarter results and full-year outlook are "transitory not structural." Ahead of the open, the shares -- which have lost nearly 7% in 2015, and have been churning in the $205-$220 range since early June -- are up 2.6%. Meanwhile, traders at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) have grown bullish in recent months. LinkedIn Corp's 50-day call/put volume ratio of 1.47 ranks just 11 percentage points from an annual high. In other words, speculators have rarely bought to open calls over puts at a more rapid rate.


• EBAY will be replaced on the S&P 100 Index (OEX) this Friday by the company it's spinning off -- Paypal Holdings Inc (NASDAQ:PYPLV). Ahead of this event -- as well as tomorrow morning's eBay Inc earnings report -- Benchmark upped its price target on the security to $71. The positive note is well-deserved, considering the stock touched a record high of $64.29 yesterday, before settling at $63.59 -- up more than 13% on the year. Bullish betting has been intense on the ISE, CBOE, and PHLX, as well. EBAY's 10-day call/put volume ratio of 4.90 indicates nearly five calls have been bought to open for every put in recent weeks. What's more, this ratio ranks in the 93rd percentile of its 52-week range. Ahead of the open, the shares are pointed 1.2% north.

Get the skinny on all the biggest stories of the morning… Sign up now to get Schaeffer's Midday Market Check delivered straight to your inbox!

U.S. stocks are sitting higher in pre-market action, as traders await a key Greek parliament vote and testimony from Fed Chair Janet Yellen. In company news, today's stocks to watch include biotech Celgene Corporation (NASDAQ:CELG), clothier Guess?, Inc. (NYSE:GES), and pediatric nutrition company Mead Johnson Nutrition CO (NYSE:MJN).

• CELG is poised to jump 8.9% -- and explore record highs -- out of the gate, after the firm said it'll buy Receptos Inc (NASDAQ:RCPT) for $7.32 billion in cash, or $232 per share, a 12% premium to RCPT's close of $207.18 on Tuesday. Analysts are cheering the M&A news, with Celgene Corporation scoring no fewer than eight price-target hikes. Among them, Baird lifted its target to $162 from $139, and Deutsche Bank upped its target to $175 from $160; both brokerage firms underscored "buy" or equivalent ratings. CELG already sports 12 "buy" or better endorsements, compared to three lukewarm "holds." At Tuesday's close, the stock sat at $122.85, boasting a year-to-date gain of 9.8%.


• GES is headed for a 6.8% surge, after the company said Victor Herrero -- a former Inditex Group exec -- will replace Paul Marciano as CEO next month. Subsequently, GES earned an upgrade to "hold" from "sell" at Evercore ISI, and a price-target hike to $24 at Wunderlich. The past year has been a struggle for Guess?, Inc., with the shares dropping 22.1% to sit at $21.16. However, since bottoming at $16.61 in mid-March, the stock has muscled higher, and is on pace to end the month atop its 10-month moving average -- and in positive year-to-date territory -- for the first time since late 2013. Should GES stage a notable rebound, short sellers could get spooked. Short interest accounts for almost 21% of the stock's total available float, representing nearly 13 sessions' worth of pent-up buying demand, at the equity's average pace of trading.


• Finally, MJN is bracing for a 4.9% drop, after the company slashed its 2015 earnings and revenue forecast, citing a cooling Chinese economy. Mead Johnson Nutrition CO got almost one-third of its sales from China in 2014. The stock touched an annual low of $87.88 yesterday, before settling at $88.13, and today's expected plunge will put the shares deeper in the red. Amid the security's technical woes, short sellers have been piling on. Short interest skyrocketed by 37.5% during the past two reporting periods, and now accounts for almost 3.7 million MJN shares.

Want an even earlier advantage on the biggest news before the bell? Sign up now to get Schaeffer's Opening View delivered straight to your inbox!

Analysts are weighing in today on mining company Barrick Gold Corporation (USA) (NYSE:ABX), Internet stock Yahoo! Inc. (NASDAQ:YHOO), and Pizza Hut parent Yum! Brands, Inc. (NYSE:YUM). Here's a quick roundup of today's bearish brokerage notes on ABX, YHOO, and YUM.

• ABX is off 0.5% this morning at $9.84, following a price-target cut to C$15.65 from C$15.75 at Haywood. This is business as usual for the shares, which have charted a steady path lower -- pressured by their 10-day moving average -- since mid-May. In fact, since touching its most recent peak of $13.60 on May 14, Barrick Gold Corporation has shed roughly 28%. Nevertheless, option traders are counting on a comeback. During the last 50 days at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), speculators have bought to open 7.62 calls for every put -- a ratio that ranks a mere 2 percentage points from a 12-month peak.


• YHOO, which will report earnings after the close next Tuesday, July 21, received a price-target reduction to $50 from $59 at SunTrust Robinson. As such, the shares are down 0.6% out of the gate at $38.40, bringing their year-to-date deficit to 24%. Amid this prolonged downtrend, option traders have been upping the bearish ante. Yahoo! Inc.'s 50-day ISE/CBOE/PHLX put/call volume ratio of 0.50 outstrips all but 3% of readings taken in the past year. In other words, traders have been buying to open YHOO puts over calls at a breakneck pace.


• In the wake of a poorly received earnings report, YUM saw its price target trimmed by $2 to $103 at J.P. Morgan Securities -- though this still represents all-time-high territory for the shares. Collectively, these developments have the stock off 2% out of the gate at $89.74 -- though this move is less than the market had priced into short-term options. Nevertheless, Yum! Brands, Inc. is still sitting on a year-to-date advance of more than 23%. Taking a step back, the brokerage bunch is fairly skeptical of the equity, with nearly 56% doling out tepid "hold" ratings. Also, YUM's consensus 12-month price target of $93.47 is just a chip-shot away from the stock's current perch.

A one-stop shop for the day's biggest headlines and more… Sign up now to get Schaeffer's Market Recap delivered straight to your inbox!

Another day, another decline in volatility. "VIX & Fear Totally Collapse," says SlopeofHope.com. And if you look at his chart, it does give the impression of volatility literally jumping off a cliff. Of course, if you construct any chart to be twice as high as it is wide, and start counting at a number higher than zero, you run the risk of producing misleading imagery.

Suppose you took 20 people and charted their height, and say they ranged between 5' and 6'6". If you started the chart at about 4'10", the taller folk would look about 10 times taller than the shorter ones. Here's how the CBOE Volatility Index (VIX) over the last five weeks looks when the width of the chart is about three times the height.

That cliff looks a lot flatter ... but whatever. Numbers are numbers and VIX has seen an abrupt drop this week. It's down 30% or so in about four trading days. That's large, but it's not unprecedented.

It's certainly a sign of "complacency," or at least a sign of a speedy reduction in fear. I'll agree with the gist of the Slope of Hope header. The real question, though, is does it mean anything for the market?

So, with that in mind, I looked at the SPDR S&P 500 ETF Trust (SPY) since July 2009. Here's every instance where VIX declined 25% close-to-close over a one-week (five trading days) stretch, and the one-week, one-month, and three-month returns, if you bought on the first close where VIX had dropped greater than 25%. On the bottom, I include random one-week, one-month, and three-month returns.

We haven't quite hit the threshold yet this go-around, as it's not quite a week off the highs yet. And hey, maybe VIX explodes today or tomorrow and we don't hit it! Anyway, as you can see, there's absolutely no signal here in any time frame. The market has mostly gone higher after the VIX implosions, but it's mostly gone higher in the last six years over any random time frame.

And it kind of makes sense. For one thing, I've yet to conjure up a study that finds a tradable signal in complacency. It's just a lousy market driver. Fear is a strong emotion and tends to resolve itself in some fashion. It's generally bullish, but at times it's incredibly bearish. Crashes happen off fear spikes, they just don't happen all that often.

Apathy is a weak emotion. By definition, it calls us to inaction. It doesn't resolve quickly ... it doesn't really resolve at all, it's just there. Calling what we see right now apathy or complacency only serves to mislead, though. A better description is that we had a fear spike that played out over about two weeks, and now we've simply returned to our regularly scheduled programming. And this is a show that's been running for over six years now. And there's no indication that an abrupt return to the norms leads to anything unusual in the markets.

Disclaimer: Mr. Warner's opinions expressed above do not necessarily represent the views of Schaeffer's Investment Research

Fitbit Inc (NYSE:FIT) continues to blister up the charts, running 4.2% higher this morning to trade at $47.90. What's more, the stock earlier touched a record peak of $48.65 -- the third straight session in which it's achieved this technical milestone. All told, FIT has surged nearly 140%, relative to its IPO price of $20 from mid-June.

This trend hasn't been lost on option players. During the last 10 days at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), traders have initiated more than 32,000 long calls compared to roughly 6,000 long puts. Stated differently, speculators have bought to open more than five FIT calls for every put, suggesting they're targeting even higher highs.

It's more of the same today, as calls are changing hands at more than double the expected rate, and three times the pace of puts. By the numbers, 10,000 calls are on the tape, versus about 3,000 puts. Digging deeper, buy-to-open activity may be transpiring at the July 47, 48, 49, and 50 calls, as bullish bettors wager on upside by Friday's close, when the front-month series expires.

Not everyone's a fan of Fitbit Inc (NYSE:FIT), however, Half of the analysts tracking the shares consider them a "hold." Plus, the stock's consensus 12-month price target of $46.11 rests below current trading levels. Should FIT race to even higher highs, these brokerages may be forced to upwardly revise their opinions -- potentially adding more fuel to the equity's fire.

Among the companies about to step up to the earnings plate are streaming content titan Netflix, Inc. (NASDAQ:NFLX), financial firm Citigroup Inc (NYSE:C), and semiconductor issue Advanced Micro Devices, Inc. (NASDAQ:AMD). Below, we'll take the pre-earnings temperature of NFLX, C, and AMD.

• NFLX just underwent its 7-for-1 stock split, and is now trading south of the century mark, at $99.59. The company is set to report second-quarter earnings after the closing bell, and short-term option traders are more call-heavy than usual. The equity's Schaeffer's put/call open interest ratio (SOIR) of 1.09 stands higher than just 36% of all other readings from the past year. In the wake of its last eight turns in the earnings confessional, Netflix, Inc. has averaged a single-session post-earnings swing of 12.1%. According to the stock's near-term at-the-money (ATM) straddle, traders are pricing in an 8.7% move in either direction. Now is an opportune time to gamble with NFLX's short-term contracts, as the stock's Schaeffer's Volatility Scorecard (SVS) of 94 suggests the stock has tended to make outsized moves over the past year, relative to what the options market has priced in. Elsewhere, Topeka Capital revised its price target on NFLX to $114.
  

• C will follow its financial-sector peers into the earnings spotlight ahead of the open tomorrow. Looking back to the past eight quarters, the stock has averaged a one-day move of 2.9% in the session after earnings. Short-term option traders are expecting more of the same, as Citigroup Inc's near-term ATM straddle is pricing in a 2.4% swing. Ahead of this go-round, speculators have been scooping up bullish bets at a much faster-than-usual clip. On the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the stock's 10-day call/put volume ratio of 4.00 registers in the 98th percentile of its annual range. C's short-term options can be had at a relative discount, too, as the equity's Schaeffer's Volatility Index (SVI) of 19% sits higher than just 27% of all other readings from the past year. At last check, financials were among the top performers today, and C is no exception, up 0.8% at $56.34. 

• Finally, AMD will unveil its second-quarter figures after the close tomorrow. Over the past eight quarters, the stock has averaged a single-session post-earnings move of 11.2%. Right now, the equity's short-term ATM straddle is pricing in a 10% move in either direction. Since gapping lower on a sales warning earlier this month, the shares of Advanced Micro Devices, Inc. have danced around the $2 level -- hitting a six-year low of $1.93 on July 9 -- and were last seen fractionally higher at $2.06, after Mizuho launched coverage with a "neutral" rating and $2.25 price target. Option buyers are betting on even lower lows, it seems, as the stock's 10-day ISE/CBOE/PHLX put/call volume ratio of 3.17 ranks in the 95th percentile of its annual range. In that same vein, short interest accounts for 15.1% of AMD's total float, and would take more than four sessions to unwind, at the security's average pace of trading. The equity's 30-day ATM implied volatility has jumped 9.7% to 77% today -- higher than 94% of all other readings from the past year, reflecting elevated volatility expectations.

By Howard Schneider and Michael Flaherty

WASHINGTON (Reuters) - Federal Reserve Chair Janet Yellen said on Wednesday the U.S. central bank remains on track to raise interest rates this year, with labor markets expected to steadily improve and turmoil abroad unlikely to throw the U.S. economy off track.

"If the economy evolves as we expect, economic conditions likely would make it appropriate at some point this year to raise the federal funds rate," Yellen said in testimony prepared for the U.S. House of Representatives Financial Services Committee, affirming the view of a central bank prepared to gradually raise rates after more than six years at a near-zero level.

Labor markets are "not yet consistent with maximum employment," she said. "Greece remains difficult. And China continues to grapple with the challenges posed by high debt, weak property markets, and volatile financial conditions."

Federal Reserve Board Chair Janet Yellen arrives to testify before a House Financial Services committee hearing on "Monetary Policy and the State of the Economy" on Capitol Hill in Washington July 15, 2015. REUTERS/Yuri Gripas

Still, "looking forward, prospects are favorable for further improvement in the U.S. labor market and the economy more broadly."

Her written statement to the committee is to be followed by a hearing later Wednesday morning. The statement largely tracked her recent public comments, as well as the most recent policy statement by the Fed's policy-setting committee.

She did, however, include an explicit defense of the Fed's "transparency and accountability," detailing the central bank's flow of information to financial markets and its press conference and audit schedules as evidence it does not need further congressional oversight.

She will likely be questioned on that very point from members of the Republican-led House committee. House members were critical of the Fed at her previous appearance before them in February. In the intervening months some lawmakers have expressed frustration over the fact that the Fed has not released all of the material Congress has requested as part of an investigation of the possible leak of information from the central bank to an economic consulting company in 2012.

Yellen has said the Fed had declined to send the information because a separate Justice Department probe is ongoing.

Yellen's statement was submitted to the committee along with a lengthier report from the Fed board on the state of the economy and financial markets.

That report included more detail on what the United States faces as it tries to go its own way in a weakened world economy. The expectation that the Fed will diverge from Europe, Japan and other central banks and begin raising rates has pushed up the value of the dollar, and driven down exports and U.S. growth, making the Fed's outlook less certain, the report said.

The report also noted concerns about a possible liquidity crisis if bond markets become stressed, an issue some investors and market analysts have cited as a potential source of future trouble. The staff report said that while there is some evidence bond markets are not as "deep" or liquid as they used to be, there is not convincing evidence of "notable deteriorations."

 

(Reporting by Howard Schneider; Editing by Paul Simao)

Analysts are weighing in today on chipmaker QUALCOMM, Inc. (NASDAQ:QCOM), biopharmaceutical firm PTC Therapeutics, Inc. (NASDAQ:PTCT), and Chinese search engine Baidu Inc (ADR) (NASDAQ:BIDU). Here's a quick roundup of today's brokerage notes on QCOM, PTCT, and BIDU.

• QCOM was started with a "neutral" rating and $68 price target at Mizuho. In the wake of this tepid note, the stock has advanced 0.2% to trade at $64.09, but remains almost 14% lower in 2015. Not surprisingly, options traders have been rolling the dice on extended losses for QUALCOMM, Inc. The security has accrued a 10-day put/call volume ratio of 1.17 across the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), with long puts outweighing long calls. What's more, this ratio ranks just 6 percentage points from a 12-month peak. Looking ahead, QCOM will report earnings one week from tonight.


• A number of drugmakers are breaking out today, and PTCT is no exception. Specifically, the shares are up 15% at $56.29 -- and back in positive year-to-date territory -- after being upgraded to "overweight" from "neutral" at J.P. Morgan Securities. Specifically, the brokerage firm gave PTC Therapeutics, Inc.'s late-stage study on its muscular dystrophy treatment, Translarna, an 80% chance of success. The gap higher -- which has PTCT above its 40-day moving average for the first time since late April -- may be putting the hurt on short sellers. Nearly 12% of the stock's float is sold short -- equaling more than one week's worth of trading activity, at typical volumes.


• BIDU has retreated 1% to trade at $189.30, following a $22 price-target reduction to $225 at BofA-Merrill Lynch. These technical struggles are consistent with the equity's track record, as the shares have given back roughly 17% of their value in 2015. Shockingly, eight of 11 analysts still maintain a "strong buy" rating on Baidu Inc. On the other hand, option traders aren't nearly so optimistic. BIDU's 50-day ISE/CBOE/PHLX put/call volume ratio of 0.71 rests just 6 percentage points from an annual peak. In other words, speculators have been scooping up puts over calls at an accelerated clip in recent months.