Schaeffer's Daily Market Blog Features: Consolidated Graphics, Devon Energy, Boston Scientific, Procter & Gamble, and Time Warner.

CINCINNATI -- Among the stocks featured in the August 2 edition of Schaeffer's Market Blog are Consolidated Graphics (NYSE:CGX), Devon Energy (NYSE:DVN), Boston Scientific (NYSE:BSX), Procter & Gamble (NYSE:PG), and Time Warner (NYSE:TWX). Schaeffer's Market Blog is just one of the many free market commentaries written every day at www.SchaeffersResearch.com - the home of Bernie Schaeffer and Schaeffer's Investment Research. The Market Blog is written throughout every trading day by Schaeffer's financial analysts and traders. They are quick insights to the day's most notable market activity from an options perspective. For additional information about this report or to have it delivered to you free via email every day click on the following link. http://www.schaeffersresearch.com/redirect.aspx?CODE=PROB12M&PAGE=1

Schaeffer's Market Blog for Tuesday, August 2, 2006:

Below are just a few of today's Market Blog entries. Click here to read all of today's Market Blog. http://www.schaeffersresearch.com/redirect.aspx?CODE=PROB1C&PAGE=1

Posted 3:41 PM Consolidated Graphics Leads the S&P 500 Index Higher

During earnings season, there is always at least one relatively unknown company that blows the doors off the confessional and forces traders to stand up and take notice. Today's profit rocket is Consolidated Graphics (NYSE:CGX). Shares of the firm have surged more than 18 percent after the company reported first-quarter net income of $13.7 million, or 97 cents per share. Revenue climbed 14 percent to $238.4 million. The commercial digital printing company also noted that it expects continued strong profit and revenue growth in the second quarter. The stock even received an upgrade to "buy" on the news.

During the short and intermediate term, CGX has been quite a mediocre performer, posting minor gains along its 10-week and 20-week trendlines. However, following a short-term pullback to long-term support at its 20-month moving average, a trendline that has ushered CGX higher since April 2003, the stock is back in business. Analyst coverage is light, with Zacks reporting only one analyst covering the shares, so additional attention could greatly benefit the stock at this point. The biggest driver for CGX gains is probably the short-selling crowd. Currently, nearly five percent of the stock's total float is sold short, and it would take about five days to buy back these bearish positions. With today's 18-percent move to the upside, I'm sure many of these bears are feeling the pinch.

Posted 3:29 PM Trouble at 66 for Devon Energy

Early this morning, Devon Energy (NYSE:DVN) reported that second-quarter earnings rose to $859 million, or $1.92 per share. Excluding non-recurring items, earnings would have been $1.57 per share. Revenue increased to $2.62 billion from last year's $2.47 billion. Analysts were expecting a profit of $1.56 per share and revenue of $2.49 billion. Despite this solid report, and the decline in weekly U.S. petroleum supplies, DVN has rallied only 0.65 percent on the session.

As it stands, the equity is once again having trouble with technical resistance at the 66 level. This region capped the stock in late April, and could pose quite a problem for the security. However, a close above the 65 level for DVN could be a signal that the equity is ready to make that leap back above 66. Currently, the 65 level is home to peak call open interest in the front three months of options. A breach of this resistance today could lend strength to the stock's recent uptrend.

Posted 12:53 PM Option Activity on Boston Scientific

Boston Scientific (NYSE:BSX) is attracting large amounts of call option volume today at the $22.50 strike. This activity seems a bit odd given that the stock is trading more than 20 percent below that strike level. While it's tough to say exactly the nature of the activity, it looks like buyer initiated action. These are probably purchases to close previously sold to open positions. If they are new positions, however, this activity would have to be considered just a bit suspicious. We'll be able to see tomorrow what happens to the open interest and be able to know for sure just what transpired here.

Posted 12:09 PM Ready to Gamble on Procter & Gamble?

Shares of Dow Jones Industrial Average component Procter & Gamble (NYSE:PG) have surged nearly five percent higher so far today after the company bested earnings expectations by a penny per share. Additionally, the firm guided first-quarter earnings to 76-78 cents per share, arriving a bit on the low side of the consensus estimate for a profit of 78 cents per share. Judging from the results in today's trading, however, many investors are apparently reading this guidance as "in line."

Option activity on the equity is also pointing to a positive bias, as nearly 9,000 calls have changed hands at each of the stock's August 60 (PG HL), September 60 (PG IL), and October 60 (PG JL) strikes. On the flip side, puts for PG are performing miserably today, with the August 55 (PG TL) receiving the only notable activity, if you can call 1,100 contracts changing hands at this front-month strike notable by comparison.

There is a fair amount of pessimism levied against PG, with the stock's Schaeffer's put/call open interest ratio (SOIR) of 1.17 ranking above 68 percent of those taken during the past year, and seven of the 15 analysts covering the shares rating them a "hold." Maybe we should just hold on this one for now. And kudos to those of you lucky enough to get into the stock prior to this mornings earnings.

Posted 10:58 AM Time Warner's AOL Details Free Direction

"I'll help you, I do declare. It's a free for all!"

It's not often that you get to use a Ted Nugent lyric on a financial website, but I felt that it was particularly fitting for a blog entry on Time Warner's (NYSE:TWX) AOL unit. The former king of dialup Internet access announced its plan today to offer e-mail, software, and other products free of charge (hence the "Free for All" quote). The move is designed to add fuel to AOL's emerging online advertising business and help save the unit from becoming just another of the dying-breed dialup ISPs.

In related news, TWX announced that second-quarter profits arrived at $1 billion, reversing a year-earlier loss. AOL ad revenue climbed 40 percent during the quarter. But can you expect this report to have any real impact on TWX shares during the short to intermediate term? There is a degree of pessimism in the stock's backdrop, but there would have to be much more for my taste before I would jump into a long position. Currently, the stock's Schaeffer's put/call open interest ratio (SOIR) of 0.71 ranks above 94 percent of those taken during the past year, six of the 12 analysts rate the shares a "hold," and TWX's short-interest ratio arrives at a meager 2.68 days to cover.

Place this wishy-washy sentiment against a technical backdrop that, while showing some signs of life during the past couple of sessions, has largely been stuck in decline mode, and I would rather go back to playing Frisbee with my free AOL coasters for now. In other words, despite TWX's nearly three-percent advance on today's earnings and AOL announcements, I am looking for a broader turnaround from the shares at this point, and investor sentiment just doesn't strike me as being up to broadband snuff yet.

For more information on these stocks or any stock in your portfolio, feel free to visit our Schaeffer's Equity Scorecard feature. Click here to read all of today's Market Blog: http://www.schaeffersresearch.com/redirect.aspx?CODE=PROB1C&PAGE=1

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Schaeffer's Investment Research, founded by Bernie Schaeffer in 1981, is a financial information and trading resources company. It publishes Bernie Schaeffer's Option Advisor, the nation's leading options subscription newsletter. The firm's contrarian approach focuses on stocks with technical and fundamental trends that run counter to investor expectations. The firm's website, http://www.SchaeffersResearch.com, is recognized as one of the leading information sources for stock and options traders and was cited as the top options website by both Forbes and Barron's. Click here for more details about Schaeffer's trading methodology: http://www.SchaeffersResearch.com/method.