Schaeffer's Daily Market Blog Features Ericsson Telephone, Analog Devices, Cognizant Technology, Whole Foods Market, and Dell.

CINCINNATI -- Among the stocks featured in the February 10 edition of Schaeffer's Market Blog are Ericsson Telephone (NASDAQ:ERICY), Analog Devices (NYSE:ADI), Cognizant Technology (NASDAQ:CTSH), Whole Foods Market (NASDAQ:WFMI), and Dell (NASDAQ:DELL). Schaeffer's Market Blog are just one of the many free market commentaries written everyday 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=PRMOU1M&PAGE=1 .

Schaeffer's Market Blog for Thursday, February 10, 2005:

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

9:59 AM Ericsson Drops Sharply on Outlook

Ericsson Telephone (NASDAQ:ERICY), the world's largest manufacturer of mobile telecommunications devices, reported fourth-quarter earnings earlier this morning. The earnings results were better than expected, as sales grew by nine percent, but the shares are dropping as the company's gross margin dropped and it issued a cautious statement about 2005 growth. Looking at the sentiment heading into the announcement, there was a buildup of pessimism from investors despite the shares rising more than 10 percent in the past few weeks. The Schaeffer's put/call open interest ratio (SOIR) is at 1.95, which is higher than 91 percent of the readings in the past year. Much of this high SOIR can be attributed to big put open interest at the 30 strike in both the February and March options series. The short-interest ratio is also indicating bearishness from investors, with a reading of 5.09 and a 43-percent increase in the number of shares sold short during the most recent reporting period. Analysts were showing caution as well with six "buy" ratings, nine "hold" ratings, and one "sell" rating. ERICY shares are down more than eight percent this morning.

10:30 AM Analog Devices Gets Upgraded Ahead of Earnings

Semiconductor manufacturer Analog Devices (NYSE:ADI) is set to release first-quarter earnings results after the close this evening, but that did not prevent Bank of America (BAC) from upgrading the stock this morning. BAC had ADI rated as a "sell", but the analyst upgraded the shares to a "buy" rating. Prior to this upgrade, there were eight "buys," eight "holds," and three "sells." The Schaeffer's put/call open interest ratio (SOIR) is at 0.75, which is in the middle of the past year's readings, indicating mixed sentiment ahead of the earnings report. To add to the non-committal sentiment, the short-interest ratio is at 2.53, neither bearish nor bullish, and the number of shares sold short dropped by a whopping 5,000 shares during the most recent reporting period.

10:48 AM Fully Cognizant

Cognizant Technology (NASDAQ:CTSH) is a New Jersey-based software specialist that outsources work to its Indian "Technocomplexes." The firm announced fourth-quarter earnings this morning of 21 cents per share against the Street estimate of 19 cents per share. Revenues soared 59.7 percent, up to $172.8 million from $108.2 million last year. The earnings-per-share figure was 10 percent better than analysts hoped, and in pre-market trading, CTSH stock was already up almost the same amount to more than $40 from a close yesterday of $36.65. Sentiment for CTSH is mixed, with a Schaeffer's put/call open interest (SOIR) of 1.62 in the 89th percentile, and short-interest ratio of 2.39 days to cover, both indicating a moderate degree of pessimism. Out of 12 analysts, Zacks tells us that five rate it a "buy" and five a mighty "strong buy." The stock is close to an all-time high and has seen the strong support of its monthly and weekly moving averages. The Schaeffer's Gold Scorecard rating for the stock is an optimistic 9.0 out of 10.

11:00 AM Whole Foods Market Tops Earnings Expectations

Last night after the market close, Whole Foods Market (NASDAQ:WFMI) reported earnings of 73 cents per share, five cents ahead of Wall Street's expectations. Revenues also came in ahead of analyst forecasts, as WFMI reported quarterly revenues of $1.37 billion versus the $1.33 billion consensus. Yesterday in the Daily Market Blog, my colleague Rick Pendergraft noted that pessimism toward WFMI was stacking up ahead of the earnings report, as evidenced by activity in the options market and short sales. From a contrarian perspective, we view skepticism ahead of a major event as a signal that investors may be setting their expectations too low. As a result, there is an attractive risk/reward profile and positive news may lead to a sharp rally. WFMI has reacted well to the positive earnings surprise. At last check, the stock was trading $5.22 higher to $95.46.

11:54 AM Conflicting Sentiment on Dell Ahead of Earnings Report

Dell (NASDAQ:DELL) is set to release its quarterly earnings report tonight after the market close, with analysts calling for earnings of 36 cents per share. There is conflicting data on the sentiment front. On the optimistic side, we have seen some positive media articles. Furthermore, financial analysts are enamored with the equity and short sellers have been reluctant to bet against it. On the other hand, option players have added puts at a brisk pace ahead of the report. Yesterday, put volume was 4.8 times heavier than the stock's average, with more than 42,300 contracts crossing the tape. The most actively traded contract was the February 40 strike (DLQ NH). Nearly 24,000 contracts of DLQ NH translated into new open interest today. What's more, overall option activity also reveals a skeptical bias from options players, with 156,300 calls compared to 169,700 puts in the front three months of activity. The resultant Schaeffer's put/call open interest ratio (SOIR) of 1.09 is higher than 96 percent of all readings taken over the past year. With the stock trading at $41.35, DELL should have support at the 40 strike from peak front-month put open interest if any of its numbers disappoint the Street.

The above are just a few of today's Daily Market Blog entries. Click here to read all of today's Daily 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.