Schaeffer's Market Observation Features AtheroGenics, Anadarko Petroleum, Maytag.

CINCINNATI -- Today's Market Observation AtheroGenics (Nasdaq:AGIX), Anadarko Petroleum (NYSE:APC), and Maytag (NYSE:MYG). Schaeffer's Market Observations are market-based reports that provide insight and analysis from a unique and unbiased perspective. Market Observations are published on www.SchaeffersResearch.com - the home of Bernie Schaeffer and Schaeffer's Investment Research. To receive a free email notification each time a new commentary is written about one of the featured stocks or any of your favorite stocks, click on the following link. http://www.schaeffersresearch.com/addinfo .

AtheroGenics

AtheroGenics (Nasdaq:AGIX) has enjoyed an increase in trading activity recently, as investors eagerly await the results for a pair of drug trials; one on a heart disease drug and the other on a rheumatoid arthritis treatment. Atherogenics Senior Vice President and Financial Chief Mark Colonnese told Dow Jones Newswires that the firm expected to announce results from both trials around the end of the quarter, which is Thursday.

Ahead of these trial results, options players jumped into the security's October 30 call on Friday. Open interest at this out-of-the-money strike surged from 7,662 to 11,618 contracts. Wall Street has high hopes for the security, as seven of the nine analysts following AGIX rate it a "buy" or better. This leaves ample room for potential downgrades should the company fail to meet expectations with its newest drugs. On the other hand, short interest surged 26 percent higher in September to 6.1 million shares. Not only does this accumulation of short positions account for more than 17 percent of the equity's float, but it would also take more than 12 days for bears to cover these positions. An unwinding of these shorted shares could fuel a significant rally in the stock

Technically speaking, AGIX has rebounded off its August 13 low of 13.29 along the support of its 10-day and 20-day moving averages. During this time, the security has tacked on more than 69 percent and is moving back into former resistance in the 25-26 area. Meanwhile, the stock's recent show of strength has left its 10-week and 20-week trendlines poised for a bullish cross. From a longer-term perspective, AGIX has broken back above its 10-month moving averages.

Traders should be wary of playing this stock ahead of its drug trial results. A positive report could send the shares shooting sharply higher, fueled by an unraveling of existing short positions. However, disappointing results could send the stock down to single-digit territory following a round of analyst downgrades.

Click the following link to see a Daily Chart of AGIX since April 2004 with 10-Day and 20-Day Moving Averages: http://www.schaeffersresearch.com/wire?ID=11235 .

Anadarko Petroleum

Oil stocks continue to put in a stellar performance, with the AMEX Oil & Gas Index (XOI - 691.09) soaring more than 45 percent over the past 12 months. Drilling down into the oil sector, we find that Anadarko Petroleum (NYSE:APC) has leapt more than 57 percent since the end of October, rising along the staunch support of its ascending 10-week and 20-week moving averages.

Despite this positive price action, investors remain overwhelmingly bearish toward the stock. In trading on Friday, options players loaded up on the security's November 65 put, adding almost 2,900 new positions. In fact, the stock's Schaeffer's put/call open interest ratio (SOIR) of 1.05 is higher than all other readings taken over the past 12 months. Furthermore, the number of APC shares sold short has shot more than 18 percent higher over the most recent reporting period to 4.6 million shares. At just 2.67 times the stock's average daily trading volume, this swell of bearish bets only offers up a modest amount of short-covering support. Turning to Wall Street, we find another bounty of bearish bets. According to Zacks, 17 of the 26 analysts following APC rate it a "hold" or worse. This leaves ample room for potential upgrades that could provide the shares with an additional lift.

Looking ahead, APC is slated to report on October 22, with the Street forecasting a profit of $1.58 per share. This is an 8.2-percent improvement over earnings for the same period a year ago. What's more, the company has surpassed the consensus estimate in each of the past five quarter by an average of 10.7 percent. Another positive earnings report could throw more fuel on the stock's rally higher.

Click the following link to see a Weekly Chart of APC since September 2003 with 10-Week and 20-Week Moving Averages: http://www.schaeffersresearch.com/wire?ID=11235 .

Maytag

Over the weekend, Maytag announced that it has ratified a new three-year contract with the International Association of Machinists and Aerospace Workers, covering production and maintenance employees at its refrigeration manufacturing facilities in Amana, Iowa.

Pessimism continues to swell toward this durable goods producer. The stock's November 17.50 put added more than 4,000 contracts on Friday. This surge in pessimistic positions lifted its SOIR from 0.87 to an annual high at 1.51. In addition, short interest exploded by 24 percent in September to 8.2 million shares - a multi-year high. At more than 10 percent of the security's float, it would take short sellers more than 10 days to cover these bearish bets. Wall Street has its doubts as well, with five of the eight analysts following MYG rating it a "hold" or worse.

This sharp increase in skepticism has been earned by the security. MYG has slid lower under resistance at its 10-week moving average since April and has breached former key support in the 19 area.

Traders should also be aware that MYG is scheduled to step into the earnings limelight on October 14. According to Zacks, analysts are predicting that the company will post a profit of 20 cents per share - down 63 percent from its year-ago gains of 55 cents per share. Historically, the firm has been somewhat shaky on the fundamental front, as MYG has missed the Street estimate twice and beaten three times over past five quarters.

Click the following link to see a Weekly Chart of MYG since March 2003 with 10-Week Moving Average: http://www.schaeffersresearch.com/wire?ID=11235 .

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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 .