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Daily Newsletter, Wednesday, 03/15/2006

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Table of Contents

  1. Market Wrap
  2. New Plays
  3. In Play Updates and Reviews

Market Wrap

Moderation in All Things

Yesterday, market watchers credited Goldman Sachs (GS) with producing yesterday's bounce or at least contributing to the exuberance of that bounce. Pre-market this morning, Lehman's (LEH) impending earnings report was blamed for the overnight hesitation in our markets. Before the open, Morgan Stanley had raised GS's price target to $165.00, and all awaited LEH's earnings announcement.

LEH was to beat expectations, but the articles touting LEH's influence had oversimplified the forces at work in the markets. They underemphasized the impact of economic releases to come, especially as they might factor into interest-rate considerations. Yesterday's move higher in the ten-year note had been the biggest gain since December, and with the release of the Beige Book scheduled for the afternoon and the CPI for tomorrow morning, SPX, OEX and Dow traders remained cautious during the pre-market session and morning hours. Those indices at first refused to follow the lead of the transports and the small caps. Yesterday's rise in crude costs also focused attention on the day's inventories number and the energy sector.

Investors were to receive reassuring news on all counts: strong manufacturing numbers, moderating import prices and moderate growth for the economy. "Moderate" was to be the battle cry for the bulls. Once the Beige Book had been released, indices charged higher. Ten-year yields had climbed to a high of 4.751 percent, but began backing off just ahead of the Beige Book release and they moderated afterwards.

When writing the weekend Wrap, I had noted an expectation that Monday and Tuesday could see a continuation of the bounce that had begun at the end of the week, but that Wednesday could be a reversal day. I'd thought that the day could be a consolidating one if not an actual reversal day, and that's what it appeared to be until the Beige Book release. That release was to change the look of the charts.

Annotated Weekly Chart of the SPX:

The Dow, taking its turn lately as the engine that powers the indices higher, stopped cold on next resistance.

Annotated Daily Chart of the Dow:

Annotated Daily Chart of the Nasdaq:

Annotated Daily Chart of the SOX:

The DJUSHB, the Dow Jones Home Construction Index, exhibited the hesitation that was afflicting many indices today. At 7:00 am, the Mortgage Bankers Association released mortgage applications for week the ending March 10. The association noted that the rate for 30-year fixed-rate mortgages had climbed to 6.42 percent, their highest rate since July 5, 2002. Points decreased.

The Market Composite Index inched down 0.2 percent on a seasonally adjusted basis. On an unadjusted basis, the activity fell 20.4 percent when compared to the year-ago level. The Refinance Index, Conventional Index, and Government Index all decreased, by 1.9 percent, 0.1 percent, and 1.4 percent, respectively. The Purchase Index climbed by 1.0 percent, however. Four-week moving averages for the Market Index and Purchase Index increased by 0.1 and 0.5 percent, respectively, while that for the Refinance Index fell 0.3 percent.

Few note this report, however, especially with other economic releases on the agenda. Those reports included the March NY Empire State Index, measuring manufacturing activity. The Index was expected to come in at 18.5-20.00, down from the prior 20.3. That February number was revised to 21.00, and March's showed a whopping gain to 31.2, its highest level since the summer of 2004. Components measuring shipments, unfilled orders and new orders all rose, with the first two of those rising more than they had in a year. Even better news to market watchers was the prices-paid component, as that component tumbled to 40.2 from February's 53.3. Not such good news for those on inflation watch, at least until the release of the Beige Book reassured them, was a sharp increase in the average workweek, to 25.3 from the previous 5.5. The employee index rose to 21.8 from the previous 6.0.

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A tight labor market could contribute to inflation pressures, and markets reacted negatively to that fear last week. However, the Empire State release improved futures for a short time, long enough for some headlines to tout the effect, although the effect wasn't long lasting.

Released at the same time were the Import/Export prices for February. Import prices fell 0.5 percent, and export prices climbed 0.1 percent. Bernanke's warnings about the effect of the deficit on the U.S. economy, covered last night in Jim's Wrap, shone a spotlight on this release, but this report lags others and so is sometimes considered old news.

While some commentators tended to focus on the lower import prices, the sharpest decline in almost two years, export prices did not increase as much as they had in the previous month. That perhaps negated some of the beneficial effect of the decrease in import prices. As Jim explained in last night's Wrap, our products must remain competitive in the global marketplace if we're to ameliorate those record deficits. Import prices were driven lower by declining costs of imported foods, with the 0.5 percent decrease a bit sharper than the forecast 0.4 percent decrease. Petroleum imports are excluded, but natural-gas imports plummeted 18 percent, also contributing to the decline.

Investors in the transportation sector had already decided that the news was all good, and had pressed the TRAN up to a new all-time high ahead of the release of the crude inventories. Railroad stocks were credited with sending the transportation sector higher, with Union Pacific (UNP) in turn credited for sending the railroad stocks higher. Union Pacific raised its first quarter and full-year forecast.

The Energy Department reported the second whopping gain of the day. Those inventories rose 4.8 million barrels for the week ending March 10. Gasoline inventories fell 900,000 barrels, and distillate inventories dropped 3.9 million barrels. The immediate focus was on the larger-than-expected build in crude inventories, with crude costs dropping as a result.

The American Petroleum Institute's release was delayed, and this industry's report differed from the government's. The API showed a build in crude inventories, too, but by 2.2 million barrels, significantly different than the government's 4.8 million number. The API reported gasoline supplies rising 184,000 barrels rather than declining as the government's figures had shown.

An analyst with Moody's Economy.com warned that the last month has seen a significant decrease in refinery utilization due to unexpected shutdowns and other maintenance issues, and that refiners needed to gear up to meet summer gasoline demand. As Jim had warned subscribers to expect last night, the IEA revised lower its estimate for global demand for oil. The agency blamed the higher recent costs for that decrease in demand. However, the Paris-based agency also lowered its estimate for new crude supply, noting that Russian and Nigerian output would slow.

The last economic release of the day was the Beige Book release at 2:00 EST. Investors found the statement that the Fed found no evidence of labor cost pressures reassuring, just as the Fed has been reassuring in recent months that crude costs are not percolating through the economy. While some hear those reassurances with some skepticism, little cynicism appeared in the market's response.

Employment was higher in many regions and sectors. While costs have risen for firms, retail prices have not. Economic conditions remain moderate, and the Fed continues to predict steady and moderate growth for the U.S. economy.

Some company-related reports also contributed to a positive tenor for the day. When Lehman's beat expectations, it also bested any other broker's quarterly profit. Expectations were that the company would earn $3.17 a share, but the company turned in earnings of $3.66 a share, including accounting-change gain of $0.16 a share. Earnings were $1.08 billion on net revenue of $4.46 billion. The company did note that a weakening U.S. mortgage market weighed on fixed-income capital markets revenue, but that revenue still rose 2 percent. The investment-management unit's revenue jumped 33 percent to a record $580 million.

"Moderate" was apparently what market watchers wanted to hear. After a week of ignoring warnings from various Fed governors and Bernanke, that word appeared to spur new gains for the day. Within thirty minutes of the release of the Beige Book, the SPX had hit and climbed above 1300, the TRAN was charging back toward the early morning new record high and would eventually beat it, the Nasdaq was piercing 2300 again, the Wilshire 5000 was hitting a new high, the RUT was within four points of its all-time high, and the BKX was testing its February high. Despite gains for the day, the Nasdaq was perhaps dragged down by the underperformance of the SOX.

Company news today also included an earnings report from Sears Holdings (SHLD), the company formed when Kmart and Sears merged. At $4.03 a share with revenue of $16.06 billion, the earnings beat expectations for $3.62 a share with revenue of $15.99 billion. Pro forma revenue dropped, however, as did domestic comparable store sales.

Dupont (DD) did its share to create a positive bias for the day. The company raised its estimates for its first-quarter adjusted earnings to $0.80 a share, up from the previous $0.70, and raised its 2006 full-year forecast to $2.70, up from $2.60. The company noted better operating performance, while also mentioning weaker European market conditions. DD gapped higher and reached a high of $43.50, although it was to close well off that high at $42.87.

Although not a component of the Dow Jones Industrials, some credited reports that Lockheed Martin (LMT) had received a new contract worth $19.25 billion from the U.S. Army with also helping to boost the industrials. LMT closed higher, but at the opening level, creating a doji for the day's candle.

Network Appliance (NTAP) was the recipient of an optimistic analyst commentary, and SanDisk (SNDK) received an upgrade. Both gapped higher but produced relatively small-bodied candles. Credit Suisse raised Lam Research (LRCX) to an outperform rating and raised its price target to $48, but cut Novellus Systems (NVLS) to a neutral rating. LRCX closed at $45.40, up from yesterday's $43.64 close. Another early morning announcement was news that Kohlberg, Kravis & Roberts (KKR), Wachovia Corp. (WB), Merrill Lynch (MER), General Electric (G) and the Bank of Nova Scotia (BNS) were joining the bidding for GMAC, offering to buy General Motors Acceptance Corp. for a price between $12.5-13 billion. The WSJ reported the offer, but GM denied that the offer was firm and also noted some aspects of the deal that it didn't like. GM posted a high of $22.00 but couldn't hold those gains and closed at $21.50.

Other early morning news included a UBS upgrade of PMC-Sierra to a buy rating, a J.P. Morgan downgrade of Palm Inc. and EchoStar's report that its profit had climbed 13 percent. The WSJ also speculated that the Chrysler unit of DaimlerChrysler (DCX) would reduce health-care benefits for its salaried workers.

Although much of the company-related news was positive, nothing positive could be found in the news that New York state's attorney general Eliot Spitzer had filed suit against H&R Block (HRB). The charges related to the company's Express IRA, a retirement vehicle that the state alleges was marketed fraudulently, had high fees, and proved unsuitable. The interest rate offered on the money market account is lower than the fees, the state claimed, so that the account decreases in value. The company disputes the state's claims. Refco Inc. has also been the subject of a probe, and today news circulated that the broker's problems may extend deeper than had been previously thought.

In other news, Sony (SNE) announced a delay until early November for the introduction of its PlayStation 3. The delay was forced by delays in copy-protection technology for the Blue-ray Disc player the console uses. Some theorized that this development would benefit Microsoft and hurt game makers. RBC Capital started Microsoft, maker of the Xbox 360, at an outperform rating. Some believed that IBM and Chartered Semiconductor, equipment suppliers for the Xbox, could benefit. The Xbox will be released this week in several countries, and SNE's delay gives the Xbox an advantage in gaining market share. MSFT closed at $27.35, leaving both upper and lower shadows but producing that close above yesterday's $27.23 close.

Today's action was mostly positive, but tomorrow's will present a new slate for investors to consider. Tomorrow's economic releases begin with Initial Claims, Building Permits and Housing Starts, and CPI at 8:30 EST. Natural gas inventories will be released at 10:30, followed by the March Philly Fed at noon. Tomorrow evening, the semi book-to-bill number will be released.

Expectations for February's CPI are for a gain of 0.1-0.2 percent, with January's number having jumped 0.7 percent. Core CPI is expected to rise 0.2 percent, following January's 0.2 percent gain. This number could move the markets. Signs of an overheating economy could trouble those who fear that the Fed will go too far with rate hikes, and the coincidence of the Building Permits release and the CPI could remind market participants what's at stake for the residential housing market if the Fed goes too far.

Earnings tomorrow include Bear Stearns', following on the heels of GS and LEH earnings this week.

The SOX has been lagging other indices, having first shown signs of topping, then breaking down, and now lagging other indices. The TRAN, however, an engine driving the SPX, OEX and Dow, charged higher again. Despite some signs that it should be topping, it continues to break to new highs. As I've often repeated, as long as that continues, the SPX, OEX and Dow aren't going to drop too far.

So, market participants face a conundrum, but when hasn't that been true? We have bifurcated markets again, with the Nasdaq not able to move too high with the SOX holding it back and many other indices not likely to drop too low with the TRAN tugging them higher. I use the SOX and TRAN, along with a few other indices, as indicator indices, and when they indicate opposite possibilities, I tend to expect choppy market behavior.

Last weekend, I noted that some of the levels shown in the charts above would be levels to watch for potential rollovers. Now that indices have charged up to those levels, watching for rollovers seems risky, and it is, but these are the levels identified late last week. New heights in the TRAN suggest breakouts more than rollovers, but bulls, at least, need to be watchful of potential rollovers and careful to protect their gains. Would-be shorts might prefer to wait for breakdowns and then retests of broken support to see if it holds as resistance. Those who live and breathe risky behavior might begin watching for those rollovers now while being as ready and willing to accept the possibility for new breakouts.

By the time trading opens tomorrow, we may have a hint of how markets will react, as the CPI will already have been released.
 

New Plays

Most Recent Plays

New Plays
Long Plays
Short Plays
ACC CCI

New Long Plays

Amer. Campus Comm. - ACC - close: 27.11 chg: +0.56 stop: 25.49

Company Description:
American Campus Communities, Inc. is one of the largest publicly traded REITs solely focused on student housing in the United States. American Campus Communities is a fully integrated, self-managed and self-administered equity REIT with expertise in the acquisition, design, finance, development, construction management, and leasing and management of student housing properties. The company owns and manages 38 high-quality student housing properties containing approximately 22,800 beds. Including its owned properties, the company provides management and leasing services at a total of 53 properties, representing approximately 32,000 beds located on or near college and university campuses. (source: company press release or website)

Why We Like It:
The REITs, or real estate investment trusts, have been performing very well. Many REITs are hitting new highs. ACC happens to be one of them. The stock broke out to new highs a few days ago and has since consolidated back toward previous resistance to retest it as new support. We see the new bounce from support in the $25.50-26.00 region as a new bullish entry point. We're going to suggest long positions above $26.00. Our target is the $29.75-30.00 range. Our time frame is about eight weeks. What we do not like about ACC is the low volume. The stock's average daily volume is under 100,000 shares. We normally try and trade stocks with average volume above 250,000 or more. Another REIT we like as a bullish candidate that does have better volume is Archstone-Smith (symbol: ASN).

Picked on March 15 at $27.11
Change since picked: + 0.00
Earnings Date 03/01/06 (confirmed)
Average Daily Volume: 70 thousand
 

New Short Plays

Crown Castle Intl. - CCI - close: 29.36 chg: -0.84 stop: 31.01

Company Description:
Crown Castle International Corp. engineers, deploys, owns and operates technologically advanced shared wireless infrastructure, including extensive networks of towers. Crown Castle offers significant wireless communications coverage to 76 of the top 100 U.S. markets and to substantially all of the Australian population. Crown Castle owns, operates and manages over 11,000 and over 1,300 wireless communication sites in the U.S. and Australia, respectively. (source: company press release or website)

Why We Like It:
We have had our eye on CCI for the last several days. The stock has been flirting with support at its rising 50-dma but has failed to produce any significant bounce. The long-term trend for CCI is very bullish and combine that with a bullish market and shorting this stock seems like a risky proposition. However, there appear to be a lot of clues suggesting that the next move in CCI will be lower. CCI has been trading under a trend of lower highs for over a month. Short-term technical oscillators are negative. Weekly technical indicators look bearish. Plus, today's session displayed plenty of relative weakness with a clear breakdown under the $30.00 level and its 50-dma. Actually if you look at the daily chart there is a bad tick that helps produce a bearish engulfing candlestick pattern. We are going to suggest shorts here with CCI under $29.50. More conservative traders may want to wait for a move under $29.00 before initiating plays. Our target will be the $26.25-26.00 range, above its 200-dma.

Picked on March 15 at $29.36
Change since picked: + 0.00
Earnings Date 05/02/06 (unconfirmed)
Average Daily Volume: 1.1 million
 

In Play Updates and Reviews

Long Play Updates

Aeropostale - ARO - close: 30.23 change: +0.22 stop: 29.99

ARO is still inching higher but remains under resistance at the $31.00 level. We're suggesting a trigger at $31.21 to open long positions. If triggered then we'll target a rally into the $33.95-34.50 range.

Picked on March xx at $xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 03/09/06 (confirmed)
Average Daily Volume: 1.1 million

---

BE Aerospace - BEAV - close: 24.60 change: +0.19 stop: 22.95

BEAV is still creeping higher along with the defense sector indices. We do notice that BEAV's MACD indicator is nearing a new buy signal. The next challenge for BEAV is resistance at the $25.00 mark. Our target is the $26.00-26.50 range but more aggressive traders may want to aim higher.

Picked on March 12 at $24.25
Change since picked: + 0.35
Earnings Date 05/05/06 (unconfirmed)
Average Daily Volume: 800 thousand

---

Hewlett Packard - HPQ - cls: 33.89 chg: +0.49 stop: 32.45*new*

Technology stocks were broadly higher today and HPQ is finally getting in on the act. The stock added 1.4% on average volume, which is an improvement on the volume picture. Technical indicators are turning bullish but the stock is nearing potential resistance in the $34.25-34.50 region. We are targeting a move into the $35.00-35.50 range. Please note that we're adjusting our stop loss to $32.45.

Picked on February 22 at $32.94
Change since picked: + 0.72
Earnings Date 02/15/06 (confirmed)
Average Daily Volume: 13.5 million

---

IAC/InterActive - IACI - close: 31.15 chg: +0.07 stop: 28.99

IACI spent the session consolidating sideways but the intraday pattern looks somewhat bullish with a trend of higher lows. The move over $31.00 has produced a new triple-top breakout buy signal on the P&F chart that points to a $40 target. Our target for IACI is the $32.90-33.00 range.

Picked on March 03 at $30.31
Change since picked: + 0.84
Earnings Date 02/08/06 (confirmed)
Average Daily Volume: 2.1 million

---

Synopsys - SNPS - close: 22.72 change: +0.43 stop: 21.58

Our play on SNPS has bounced back into the green today. The stock added almost 2% on above average volume and that's a good sign for the bulls. The MACD indicator is nearing a new buy signal. We would still consider new bullish positions here. Our target is the $24.40-24.50 range.

Picked on March 02 at $22.49
Change since picked: + 0.23
Earnings Date 02/15/06 (confirmed)
Average Daily Volume: 1.4 million
 

Short Play Updates

Amkor Tech. - AMKR - close: 8.95 change: +0.31 stop: 9.01

The SOX was definitely under performing some of the other technology-related sector indices but that didn't stop AMKR from bouncing. AMKR rebounded right back toward resistance near the $9.00 level. We are not suggesting new bearish positions and more conservative traders may want to exit early given today's breakout over its simple 10-dma. If the markets are positive tomorrow (or the SOX) then we expect to be stopped out at $9.01.

Picked on March 09 at $ 8.50
Change since picked: + 0.34
Earnings Date 05/10/06 (unconfirmed)
Average Daily Volume: 3.2 million

---

Baidu.com - BIDU - close: 48.50 change: -0.20 stop: 52.11

We don't see any change from our previous updates. BIDU continues to show relative weakness. This remains a risky play and given the market environment we're not suggesting new positions. We are going to target the $41.00-40.00 range. More conservative traders might want to exit near the February lows (around $44).

Picked on March 09 at $ 48.32
Change since picked: + 0.18
Earnings Date 05/23/06 (unconfirmed)
Average Daily Volume = 788 thousand

---

Hilton Hotels - HLT - close: 23.22 chg: +0.22 stop: 24.06

We warned readers to watch for a bounce in HLT today. However, we expected a rebound toward $23.50. It looks like the bounce stalled at $23.30 near its simple 200-dma. We're not suggesting new bearish positions. Our target is the $22.25-22.00 range.

Picked on March 02 at $23.98
Change since picked: - 0.77
Earnings Date 05/02/06 (unconfirmed)
Average Daily Volume: 2.9 million

---

Hovnanian - HOV - close: 44.54 change: -0.51 stop: 46.11

There was no follow through on yesterday's big bounce in the homebuilders. That's good news for the bears but we're not out of danger yet. HOV dipped toward the $44.00 level today and failed to breakdown below it. We are not suggesting new bearish positions.

Picked on March 05 at $44.85
Change since picked: - 0.31
Earnings Date 03/01/06 (confirmed)
Average Daily Volume: 972 thousand

---

Officemax - OMX - close: 29.02 chg: +0.07 stop: 29.41

We are fortunate that OMX did not participate more in today's market rally. However, just because it didn't doesn't mean we're out of the woods yet. We are not suggesting new positions at this time. Our target is the $27.10-27.00 range.

Picked on March 14 at $28.69
Change since picked: + 0.33
Earnings Date 05/04/06 (unconfirmed)
Average Daily Volume: 1.0 million
 

Closed Long Plays

None
 

Closed Short Plays

None
 

Today's Newsletter Notes: Market Wrap by Linda Piazza and all other plays and content by the Option Investor staff.

DISCLAIMER

Option Investor Inc is neither a registered Investment Advisor nor a Broker/Dealer. Readers are advised that all information is issued solely for informational purposes and is not to be construed as an offer to sell or the solicitation of an offer to buy, nor is it to be construed as a recommendation to buy, hold or sell (short or otherwise) any security. All opinions, analyses and information included herein are based on sources believed to be reliable and written in good faith, but no representation or warranty of any kind, expressed or implied, is made including but not limited to any representation or warranty concerning accuracy, completeness, correctness, timeliness or appropriateness. In addition, we do not necessarily update such opinions, analysis or information. Owners, employees and writers may have long or short positions in the securities that are discussed.

Readers are urged to consult with their own independent financial advisors with respect to any investment. All information contained in this report and website should be independently verified.

To ensure you continue to receive email from Option Investor please add "support@optioninvestor.com"

Option Investor Inc
PO Box 630350
Littleton, CO 80163
Copyright Option Investor Inc, 2005
All rights reserved

Play Updates

Updates On Latest Picks

Long Play Updates

Aeropostale - ARO - close: 30.23 change: +0.22 stop: 29.99

ARO is still inching higher but remains under resistance at the $31.00 level. We're suggesting a trigger at $31.21 to open long positions. If triggered then we'll target a rally into the $33.95-34.50 range.

Picked on March xx at $xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 03/09/06 (confirmed)
Average Daily Volume: 1.1 million

---

BE Aerospace - BEAV - close: 24.60 change: +0.19 stop: 22.95

BEAV is still creeping higher along with the defense sector indices. We do notice that BEAV's MACD indicator is nearing a new buy signal. The next challenge for BEAV is resistance at the $25.00 mark. Our target is the $26.00-26.50 range but more aggressive traders may want to aim higher.

Picked on March 12 at $24.25
Change since picked: + 0.35
Earnings Date 05/05/06 (unconfirmed)
Average Daily Volume: 800 thousand

---

Hewlett Packard - HPQ - cls: 33.89 chg: +0.49 stop: 32.45*new*

Technology stocks were broadly higher today and HPQ is finally getting in on the act. The stock added 1.4% on average volume, which is an improvement on the volume picture. Technical indicators are turning bullish but the stock is nearing potential resistance in the $34.25-34.50 region. We are targeting a move into the $35.00-35.50 range. Please note that we're adjusting our stop loss to $32.45.

Picked on February 22 at $32.94
Change since picked: + 0.72
Earnings Date 02/15/06 (confirmed)
Average Daily Volume: 13.5 million

---

IAC/InterActive - IACI - close: 31.15 chg: +0.07 stop: 28.99

IACI spent the session consolidating sideways but the intraday pattern looks somewhat bullish with a trend of higher lows. The move over $31.00 has produced a new triple-top breakout buy signal on the P&F chart that points to a $40 target. Our target for IACI is the $32.90-33.00 range.

Picked on March 03 at $30.31
Change since picked: + 0.84
Earnings Date 02/08/06 (confirmed)
Average Daily Volume: 2.1 million

---

Synopsys - SNPS - close: 22.72 change: +0.43 stop: 21.58

Our play on SNPS has bounced back into the green today. The stock added almost 2% on above average volume and that's a good sign for the bulls. The MACD indicator is nearing a new buy signal. We would still consider new bullish positions here. Our target is the $24.40-24.50 range.

Picked on March 02 at $22.49
Change since picked: + 0.23
Earnings Date 02/15/06 (confirmed)
Average Daily Volume: 1.4 million
 

Short Play Updates

Amkor Tech. - AMKR - close: 8.95 change: +0.31 stop: 9.01

The SOX was definitely under performing some of the other technology-related sector indices but that didn't stop AMKR from bouncing. AMKR rebounded right back toward resistance near the $9.00 level. We are not suggesting new bearish positions and more conservative traders may want to exit early given today's breakout over its simple 10-dma. If the markets are positive tomorrow (or the SOX) then we expect to be stopped out at $9.01.

Picked on March 09 at $ 8.50
Change since picked: + 0.34
Earnings Date 05/10/06 (unconfirmed)
Average Daily Volume: 3.2 million

---

Baidu.com - BIDU - close: 48.50 change: -0.20 stop: 52.11

We don't see any change from our previous updates. BIDU continues to show relative weakness. This remains a risky play and given the market environment we're not suggesting new positions. We are going to target the $41.00-40.00 range. More conservative traders might want to exit near the February lows (around $44).

Picked on March 09 at $ 48.32
Change since picked: + 0.18
Earnings Date 05/23/06 (unconfirmed)
Average Daily Volume = 788 thousand

---

Hilton Hotels - HLT - close: 23.22 chg: +0.22 stop: 24.06

We warned readers to watch for a bounce in HLT today. However, we expected a rebound toward $23.50. It looks like the bounce stalled at $23.30 near its simple 200-dma. We're not suggesting new bearish positions. Our target is the $22.25-22.00 range.

Picked on March 02 at $23.98
Change since picked: - 0.77
Earnings Date 05/02/06 (unconfirmed)
Average Daily Volume: 2.9 million

---

Hovnanian - HOV - close: 44.54 change: -0.51 stop: 46.11

There was no follow through on yesterday's big bounce in the homebuilders. That's good news for the bears but we're not out of danger yet. HOV dipped toward the $44.00 level today and failed to breakdown below it. We are not suggesting new bearish positions.

Picked on March 05 at $44.85
Change since picked: - 0.31
Earnings Date 03/01/06 (confirmed)
Average Daily Volume: 972 thousand

---

Officemax - OMX - close: 29.02 chg: +0.07 stop: 29.41

We are fortunate that OMX did not participate more in today's market rally. However, just because it didn't doesn't mean we're out of the woods yet. We are not suggesting new positions at this time. Our target is the $27.10-27.00 range.

Picked on March 14 at $28.69
Change since picked: + 0.33
Earnings Date 05/04/06 (unconfirmed)
Average Daily Volume: 1.0 million
 

Closed Long Plays

None
 

Closed Short Plays

None
 

top

Today's Newsletter Notes: Market Wrap by Linda Piazza and all other plays and content by the Option Investor staff.

DISCLAIMER

Option Investor Inc is neither a registered Investment Advisor nor a Broker/Dealer. Readers are advised that all information is issued solely for informational purposes and is not to be construed as an offer to sell or the solicitation of an offer to buy, nor is it to be construed as a recommendation to buy, hold or sell (short or otherwise) any security. All opinions, analyses and information included herein are based on sources believed to be reliable and written in good faith, but no representation or warranty of any kind, expressed or implied, is made including but not limited to any representation or warranty concerning accuracy, completeness, correctness, timeliness or appropriateness. In addition, we do not necessarily update such opinions, analysis or information. Owners, employees and writers may have long or short positions in the securities that are discussed.

Readers are urged to consult with their own independent financial advisors with respect to any investment. All information contained in this report and website should be independently verified.

To ensure you continue to receive email from Option Investor please add "support@optioninvestor.com"

Option Investor Inc
PO Box 630350
Littleton, CO 80163
Copyright Option Investor Inc, 2005
All rights reserved

Today's Newsletter Notes: Market Wrap by Linda Piazza and all other plays and content by the Option Investor staff.

DISCLAIMER

Option Investor Inc is neither a registered Investment Advisor nor a Broker/Dealer. Readers are advised that all information is issued solely for informational purposes and is not to be construed as an offer to sell or the solicitation of an offer to buy, nor is it to be construed as a recommendation to buy, hold or sell (short or otherwise) any security. All opinions, analyses and information included herein are based on sources believed to be reliable and written in good faith, but no representation or warranty of any kind, expressed or implied, is made including but not limited to any representation or warranty concerning accuracy, completeness, correctness, timeliness or appropriateness. In addition, we do not necessarily update such opinions, analysis or information. Owners, employees and writers may have long or short positions in the securities that are discussed.

Readers are urged to consult with their own independent financial advisors with respect to any investment. All information contained in this report and website should be independently verified.

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