Daily Commentary From SIR Highlights the Following Stocks: Johnson & Johnson, Newmont Mining, Northrop Grumman, AT&T, Seagate Technology.

Business Editors

CINCINNATI--(BUSINESS WIRE)--Oct. 29, 2003

This daily report contains a brief commentary on the day's most notable activity and a table listing the most active calls and puts for the day. The Midday Options Update is published every day at SchaeffersResearch.com . For additional information about this report or to have it delivered to you via email everyday click on the following link: http://www.schaeffersresearch.com/addinfo .

Today's Daily Commentary focuses on: Johnson & Johnson (NYSE:JNJ), Newmont Mining (NYSE:NEM), Northrop Grumman (NYSE:NOC), AT&T (NYSE:T), Seagate Technology(NYSE:STX).

Investors prefer to cool their heels on the sidelines this afternoon following Tuesday's late-day rally on positive comments from the FOMC. With a startling lack of economic news, the Street has been left to sift through the latest earnings information for possible trading ideas.

The Dow Jones is currently trapped in a tug-of-war as investors fight it out over AT&T (NYSE:T), Johnson & Johnson (NYSE:JNJ), and Boeing. Digging into the news, Ma Bell has slipped more than three percent on reports that BellSouth has called off merger talks. Meanwhile, pharmaceutical firm JNJ is being hit by news that the FDA is warning of "adverse events" associated with the firm's drug-coated stents. So far there have been reports linking the device to blood clots and more than 60 deaths. The stock has backpedaled more than three percent to a new 52-week low. On a high note, Boeing has glided more than six percent higher after posted third-quarter earnings of 32 cents per share. This was short of its profit of 46 cents per share for the same period a year ago, but ahead of the consensus estimate of 25 cents per share.

In other news on a the Street, gold miner Newmont Mining (NYSE:NEM) reached a new 52-week high after posting a third-quarter profit of 28 cents per share. The firm surpassed the Street estimate by three cents per share as revenue soared 25 percent during the previous quarter. Northrop Grumman (NYSE:NOC) is also trading higher after raising full-year and 2004 earnings guidance. However, the defense contractor missed the earnings estimate for last quarter by a penny.

At 1:20 p.m. eastern time, the Dow Jones Industrial Average (DJIA - 9766.1) is up 0.18 percent and the S&P 500 Index (SPX - 1047.49) is higher by 0.07 percent. The Nasdaq Composite (COMP - 1931.0) is down 0.07 percent. At 1:22 p.m. in the options pits, 1,583,334 calls and 951,881 puts traded for a composite put/call ratio across all five exchanges of 0.60. The CBOE put/call ratio for equity options weighed in at 0.51.

Seagate Technology (NYSE:STX) has passed endured a roughly couple of weeks recently. This hard drive manufacturer reported earnings after the close on October 21, besting the Street estimate by four cents per share. First-quarter revenue had risen to $1.74 billion while disk drive shipments increased by 27 percent. Everything was looking quite rosy until the firm divulged that the SEC has launched an inquiry into the company. The commission is looking into allegations made by a former employee that STX has incorrectly reallocated certain expenses between costs of good sold and research and development costs in its financial statements.

Casting shadows over the company's otherwise positive report, the stock gapped sharply lower the following day on heavy trading volume. Prior to this announcement, the shares had climbed more than 250 percent from their March low to their October high along support at their 10-day and 20-day moving averages. The security is currently attempting to rebound, but is facing potential resistance at its declining 10-day moving average. On a positive note, STX has succeeded in pulling back above its 20-week trendline.

From a sentiment standpoint, pessimism continues to dominate on the shares (even before the SEC inquiry). The equity's Schaeffer's put/call open interest ratio checks in at 0.68 and is hovering near highs for all those taken for security. In fact, the stock's November 22.50 put has been the focus of today's trading, with more than 17,300 contracts changing hands. This option is already the site of peak front-month put open interest with more than 30,600 contracts. Adding to the pessimistic sentiment, the number of STX shares sold short jumped 22 percent in October to 7.6 million.

This may be an interesting stock to watch. With pessimism heavy on the shares, STX definitely has the fuel to push it higher as investors unwind these bearish positions, and a reclaiming of former support (such as its short-term trendlines) may convince skeptics to do so. Of course, the specter of the SEC's investigation could definitely throw a wrench into the stock's rally if the results come up sour.

Click the following link to see the Daily Chart of STX since March 2003 with 10-Day Moving and 20-Day Moving Averages: http://www.schaeffersresearch.com/wire?ID=8759.