Option Investor
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Holding highs on light volume

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It has been another light volume session with the New York Composite (NYA.X) 484 +1.8% is just now approaching the 1 billion share traded mark, while the NASDAQ Composite (COMPX) 1,395 +2.4% has just eclipsed the 1 billion shares traded, both rather light with just 45-minutes left in today's session.

While today's trade is light for the fourth straight session, all sectors with the exception of the CBOE Internet Index (INX.X) 95.64 +0.03% are showing gains.

The Gold/Silver Index (XAU.X) 77.42 +0.4% turned an earlier session loss into a gain as Gold futures reached a 3-year high, with the February contract (gc03g) spiking to $338 per ounce. The move higher was offset with a rather quick lower move in the U.S. Dollar Index (dx00y) $104.06 +0.07%, which trades near its multi-year low of 103.54.

Despite the intra-day divergence between gold and the dollar, stocks have held their gains with the Dow Industrials posting a 178-point gain, the S&P 500 (SPX.X) further its rebound above 900 at 909 here, and the NASDAQ Composite (COMPX) looking to close in on 1,400.

Telecom stocks are being led higher by Dow component SBC Communications (NYSE:SBC) $27.11 +5.28% after UBS Warburg said chances were improving that the company would receive approval to provide long-distance service in California.

Market breadth is on the mend after several sessions of negative results. NYSE currently shows breadth positive with advancers outnumber decliners by a 2 to 1 margin, while NASDAQ breadth shows advancers having an upper-hand on decliners by a 19 to 14 margin.

New highs versus new lows is positive at both the NYSE and NASDAQ. 35 stocks have traded new 52-week highs on the NYSE versus 25 stocks trading new lows, while NASDAQ shows 56 stocks trading a 52-week high compared to 46 stocks at new lows.

Another biotech stock has seen some near-term negative action as MedImmune (NASDAQ:MEDI) $24.70 -7.24% trades lower as the session progresses. Tomorrow, the company appears before the U.S. advisory panel to seek backing for the company's nasal spray called FluMist. In July 200, the FDA advisers said they were not convinced that the vaccine was safe enough to win marketing approval. In recent sessions, the stock has found formidable resistance on its point and figure chart at downward trend of $28, and currently carries a bearish vertical count of $11.00. I like a play in the Jan $25 puts (MEQME) $2.30 ahead of tomorrow's advisory meeting. I don't like to profile biotech stocks as outright shorts due to higher risk and gapping nature on any type of favorable news regarding surprise cures and look to the options market to help mitigate risk.

Jeff Bailey

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