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Stocks edge higher on light volume

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Stocks edged fractionally higher as bond traders took the day off in observance of Columbus Day, where the very broad NYSE Composite ($NYA.X) 6,643.17 +0.10% rose 6.7 points, trading a very tight 15-point range on extremely light volume of just 940 million shares.

While most sectors recouped portions of Friday's losses, an earnings warning from oil service equipment maker Lone Star Technologies (NYSE:LSS) $29.25 -23.42% that higher steel prices would negate any positives from higher raw energy prices had the Oil Service Index (OSX.X) 120.42 -2.62% trading back from three- year highs set on Thursday.

Smith Barney was out raising its targets for the oil services and drilling stocks due to the rapid implementation of prices increases.

An upgrade of Biogen/Idec (NASDAQ:BIIB) $60.30 +2.29% by Lehman Brothers helped offset continued weakness from Chiron (NASDAQ:CHIR) $34.28 -3.78% and had the Biotechnology Index (BTK.X) 513.57 +1.19% edging out the CBOE Internet Index (INX.X) 178.60 +1.12% and S&P Retail Index (RLX.X) 415.35 +1.01% for Monday's sector winners.

Market Snapshot / Internals - 10/11/04 Close

The Semiconductor Index (SOX.X) 391.53 +0.51% managed to shrug off some cautious, if not negative morning comments out of Deutsche Securities, where the broker doesn't see sector fundamental improving until mid-2005 at the soonest.

Deutsche cut its estimates for Texas Instruments (NYSE:TXN) $21.89 -0.72% and Micron Technology (NYSE:MU) $11.90 -0.91% 10- 15% below Wall Street's consensus estimates, and said it believes there may still be 25% to 30% downside from Friday's closing prices.

Citing the firm's recent trip to Asia, Deutshe believes the sector is in a cyclical downturn, not a seasonal downturn as evidenced by Analog Device's (NSYE:ADI) $38.39 -0.64% and National Semiconductor's (NYSE:NSM) $15.63 -0.70% recent earnings, and few company's that expected a seasonal uptick saw it.

U.S. Market Watch - 10/11/04 Close

As bond traders took the day off, equity traders may have too, where volumes at both the NYSE and NASDAQ were hardly enough to fill a bullish or bearish sale.

Market Volatility (VIX.X) slid fractionally with the SPX Dec. 1,125 puts (SPT-XE) $27.00 -6.89% most active at 10,307 contract (OI 54,421), Dec. 1,025 puts (SPQ-XE) $5.50 -9.83% second-most at 9,484 (OI 67,676), while premium sellers looked desperate with the Oct. 1,150 calls (SPT-JJ) $0.30 -33.33% trading 6,687 contracts (OI 43,000).

Pivot Matrix -

With three-days left until October expiration, the S&P 100 Index (OEX.X) closes right at its October "Max Pain" theory value of 540 (5-point increments), while the more volatile NASDAQ-100 Index (NDX.X) holds 12-points above its October "Max Pain" theory value of 1,425 (25-point increments), both below this week's WEEKLY Pivots. Withstanding any big earnings surprises (up or down) that hadn't been warned about, we may well be bound between WEEKLY S1 and WEEKLY R1s this week, where the burden of proof is probably on bulls to get an OEX close above its 200-day SMA (548).

Jeff Bailey

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