Option Investor
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  Jeff Bailey   7/16/02,  10:42:05 PM
Oil stocks May be on the bullish trader's watch list Wednesday. Late Tuesday, the Amer. Petr. Inst. (API) reported that crude inventories fell by 4.03 million barrels. Not long after, September Crude futures (cl02u) traded a contract high at $28.05 and creates some DIVERGENCE between the commodity and oil equities that are off their highs.

Thinking here might be that equities have been in a bit of a "sell it all and save my portfolio" type of thinking and oil-related equities have been thrown out with the bathwater.

One stock in group to watch for break above $52.45, stop $49.75 from a "tweezer bottom" is Apache (NYSE:APA) $51.29 -1.98% for a "pop" to $55 on higher domestic crude prices. Link

July option expiration is Friday, and open interest in APA calls is at $55 and $60, both at about 2,500 contracts. Put open interest is 8,200 at $60 and 5,181 at $55. "Smart money" sold the calls and bought the puts and may not want to risk it into expiration. If they start closing them out, APA could try and settle the $55 strike by Friday. Using the API data and Crude at contract highs as scenario to unwind the options.

  Jeff Bailey   7/16/02,  10:03:21 PM
Bull Confirmed The more volatile NASDAQ-100 Bullish % ($BPNDX) reached the needed 24% level (24 of 100 stocks now showing a "buy signal") and closed with a reading of 29%. This puts the NASDAQ-100 in "bull confirmed" status at a relatively low level and still below the "oversold" 30%. Link Bearish traders short some 4-lettered stocks must now immediately assess risk to future "buy signals" and perhaps getting more aggressive with their short-covering and locking in of bearish gains.

Attention will also turn to the narrow, yet not as technology filled S&P 100 Bullish % ($BPOEX) which edged lower at 14% from Monday's 15% (net loss of 1 stock to a sell signal). If correlated against the Sept. 2001, post terrorist levels, this market is still weak, but "less risky" for bulls than market conditions found at Septembers 16% level. Traders are monitoring for a reversal up to 20% and a "bull alert" reading to perhaps begin building some confirming signs of demand that may help drive the tech-heavy NASDAQ-100. Here's the S&P 100 Bullish % chart Link

Then as we step out to the broader S&P 500 Bullish % ($BPSPX) we find very modest improvement from Monday's 21.8% reading with Tuesday's action seeing modest improvement to 22%. Still "bear confirmed," but approaching the September low reading of 16%. Again.... NASDAQ-100 bulls would like to see some type of reversal higher in the much broader S&P 500 Bullish % ($BPSPX) to 28% and a "bull alert" reading to create a potential "tide" of bullishness to depict demand outstripping supply. Here's the S&P 500 Bullish % chart Link

  Jeff Bailey   7/16/02,  9:47:30 PM
Market Monitor has been archived. To view Tuesday's commentary, simply click this Link


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