Schaeffer's Daily Market Blog Features United States Steel, AK Steel, Arthrocare, Questar, and Ceradyne.

CINCINNATI -- Among the stocks featured in the July 26 edition of Schaeffer's Market Blog are United States Steel (NYSE:X), AK Steel (NYSE:AKS), Arthrocare (NASDAQ:ARTC), Questar (NYSE:STR), and Ceradyne (NYSE:CRDN). Schaeffer's Market Blog is 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=PROB1M&PAGE=1 .

Schaeffer's Market Blog for Tuesday, July 26, 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 .

10:59 AM Skepticism on Ceradyne Ahead of Earnings

According to Hoover's, Ceradyne's (NASDAQ:CRDN) advanced ceramics products combine hardness with light weight and the ability to withstand high temperatures, resist corrosion, and insulate against electricity. Some uses of CRDN's materials include armor for military helicopters, missile nose cones, body armor for soldiers, diesel engine components, ceramic industrial products, and orthodontic brackets. The company sells to contractors and OEMs. The firm is scheduled to report second-quarter earnings results on Thursday before the market open. The last time CRDN posted earnings in late April, the stock rose almost five percent that day and went on to gain more than 20 percent during the next five weeks. Going into this week's report, some skepticism exists. Short interest remains substantial as the 2.7 million shares shorted amounts to 12 percent of the stock's float and generates a short-interest ratio of eight days. The stock has consolidated sideways this month, closing each July session between 25.16 and 27.20.

11:34 ARE Questar Higher on Positive Analyst Coverage

According to Yahoo! Finance, Questar (NYSE:STR) and its subsidiaries operate as a natural gas-focused energy company. The company operates through its three subsidiaries: Questar Market Resources, Questar Pipeline Company, and Questar Gas Company.

STR is trading higher this morning on positive analyst comments. Harris Nesbitt initiated coverage of STR with an "outperform" rating. Technically speaking, the security has been a stellar performer, gaining more than 70 percent during the past year. A look at its weekly chart reveals STR has been in a pronounced uptrend since for quite some time.

Despite its strong price action, the security has not attracted much attention from option speculators. There are fewer than 4,000 contracts of open interest in the front three months of activity. Financial analysts have not flocked to the equity either, as there are currently five "buy" ratings, four "hold" ratings, and no "sell" ratings on STR. This lack of positive attention in the wake of its outperformance may suggest the rally in the stock has more room to run.

1:30 PM Arthrocare Up on Positive Study News

Last month, I wrote about Arthrocare (NASDAQ:ARTC) . Well, the company is in the news today. ARTC announced new study data published this month in Arthroscopy: The Journal of Arthroscopic & Related Surgery showed the use of a Coblation-based technology known as Topaz -- developed by ARTC -- to be effective when used in the treatment of common tendon disorders such as lateral epicondylitis, the condition commonly known as tennis elbow. Based upon the results of this study, the use of Topaz in the treatment of tendons is safe and effective for at least two years, post-op. The stock is up modestly on the news to 35.36. It's just a chip shot away from 35.92, its highest point since September 2000. The stock is one of the most heavily shorted stocks in the market. Its short interest of more than 6.3 million shares is an all-time high and amounts to a huge 26 percent of the stock's float.

1:30 PM Looking For a Breakout

The S&P 500 Index (SPX) has traded in a tight range that has been getting even tighter during the past several sessions. This lack of volatility can be very stressful on traders who look for extended moves in order to make a living. What we are seeing right now, however, is a consolidation around the 10-day moving average for the SPX. The dampening volatility amid the consolidation can actually be a sign that a breakout is imminent. A look at the chart suggests that this breakout should be to the upside, but you can never be sure. A similar situation happened when the SPX was consolidating at its 10-day trendline back in early June.

2:02 PM U.S. Steel Up After Earnings

U.S. Steel (NYSE:X) is leaping higher after reporting its earnings this morning mid-session. The shares had dropped leading up to the report, then caught a quick bid before dropping again. After hanging around the 41.30 level for about an hour, the stock then decided to take off and is currently approaching 44. It's possible the high level of short interest is causing some what of a short squeeze as the shares move higher. More than 12 percent of the stock's float is sold short.

2:58 PM Now I'm Impressed

Adding to what John said in the last blog, I've been talking about the strength in steel stocks a lot the past two weeks and I must say that today has me pretty impressed. This morning AK Steel (NYSE:AKS) came out and missed earnings, and then intraday United States Steel (X) announced earnings that were way off the mark. But wouldn't you know it, both of those names are really rocking now, as AKS is up six percent and X is up five percent. Yes, they both did announce good things going forward, but this reaction says a lot about the overall expectations for steel stocks - let's just say it isn't very optimistic.

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 .

Take advantage of the timely Schaeffer commentaries by signing up for their free e-newsletters -- Opening View, Market Recap and Monday Morning Outlook. Click here to have the Schaeffer's commentaries delivered to you free via email every day. http://www.schaeffersresearch.com/redirect.aspx?CODE=PROB1M&PAGE=1 .

About Schaeffer's Investment Research (www.SchaeffersResearch.com)

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 .