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Rise in jobless claims has stocks lower

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Stock futures have taken a turn lower this morning after the Labor Department reported that jobless claims for the week ending March 30th rose by 64,000 to 460,000, which was much higher than the consensus of 380,000. The Labor Department blamed the increase on federal extension filings, which were recently approved by Congress. As a result, this should not necessarily be seen as a negative for the economy per say, as it would reflect a legislative change rather than an economic change.

S&P futures have turned lower after the jobless data was released and the June futures (sp02m) trade down 4 points at 1,126. NASDAQ futures (nd02m) trade lower by 19.5 points at 1,394, while Dow futures (dj02m) are down 33 points at 10,200.

Check Point Software hammered in pre-market

premierinvestor.net and OptionInvestor.com subscribers may be wearing a grin this morning if short a recently mentioned and profiled bearish play in Check Point Software (NASDAQ:CHKP) $27.46 as the stock get hit hard in pre-market action and trades $20.26 after the company warned on earnings. The company reduced its Q1 outlook to $0.24-$0.25 (consensus $0.29) and guided revenues to $104-$105 million (consensus $122.2 million) blaming a depressed IT spending environment.

Bears short/put this stock can simply lower their stops to further profitability just above the $21.50 level, which would be just above our targeted level of retracement support at $21.49. This would allow a trader to still benefit from any further decline in the stock, but now the bad news is out and it time to get ready to lock in a very nice gain.

Fulcrum at it again

In yesterday's market monitor on OptionInvestor.com I noted that shares of PacifiCare Health Systems (NASDAQ:PHSY) $18.40 were rising sharply on no news. This is a stock we mentioned back in early February as a bullish looking healthcare stock that did rise sharply after our original profile, but that rally was cut short after investment firm Fulcrum reiterated a sell rating at the $21 level citing potential problems with the Texas Attorney General's office.

Fulcrum is once again reiterating its "sell" rating this morning and the company is calling on PHSY to publicly comment on issues raised by the Texas Attorney General in a letter to PHSY's attorney's; the Texas Attorney General letter alleges that 1) PHSY's answer to a Fulcrum question on the Q4 conference call regarding United Health (NYSE:UNH) was false and misleading, and that 2) PHSY's public assertions of full cooperation with Texas AG are strongly denied by the Attorney General. In addition, the AG sent to Fulcrum a copy of a letter sent by the President of United Health (UNH) in Texas to PHSY demanding that PHSY set the record straight.

To me (Jeff Bailey) it is becoming more obvious that Fulcrum is most likely a big short in this stock. I do not know this for a fact, but Fulcrum has conviction on PHSY as they have reiterated a "sell" rating on PHSY just about every time the stock begins to rise.

An aggressive trader can trade this stock, but I would tend to not hold the stock overnight (long or short) as this is turning into a "he said she said" type of battle.

Shares of PHSY look to be trading near unchanged levels this morning after Fulcrum's latest "sell" rating.

Jeff Bailey
Senior Market Technician
Option Investor

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