Option Writers Newsletter, Wednesday, 01/26/2005 01:26:59 PM ET
HAVING TROUBLE PRINTING?
Another Day Of Gains...
The major equity averages enjoyed upside activity for the second
consecutive session Wednesday amid a gaggle of favorable earnings
reports from the technology segment.
Shares of Texas Instruments (NYSE:TXN) rallied after the world's
largest maker of chips for cell phones announced earnings that
topped a forecast it gave in December. The positive report set
the stage for Oracle Software (NASDAQ:ORCL), which solidified
the early upside momentum by sharply raising its 2006 forecast,
citing likely earnings gains related to its recent acquisition of
PeopleSoft. Other bullish reports came from Electronic Arts
(NASDAQ:ERTS), the popular video-game publisher, and Flextronics
International (NASDAQ:FLEX), the leading contract electronics
In the broader market, advances were less pronounced, but a
few individual performances are worth noting. Drug maker Eli Lilly
and Co. (NYSE:LLY) climbed over 3% after posting earnings that
exceeded analysts' estimates. ConocoPhillips (NYSE:COP) moved
above $90 after reporting that quarterly profit more than doubled,
boosted by record-high oil and gas prices. Johnson & Johnson
(NYSE:JNJ) extended Tuesday's rally, which emerged in the wake
of fourth-quarter profits that outpaced consensus expectations.
Even with the early strength in equity values, many traders are
unconvinced the recent uptrend will prevail. Three weeks of
losses have left a bitter reminder of the "bubble burst" that
began in late 2000 and lasted more than 2 years. Most experts
agree that until there is a major catalyst for buying, only a
select few stocks will enjoy sustained upside activity. Our
outlook is somewhat more hopeful, but as long as the market's
direction is undefined, we will continue to maintain a "cautiously
optimistic" attitude in the positions offered our portfolio.