Schaeffer's Midday Options Update Features Boston Scientific.CINCINNATI -- Today's Schaeffer's Midday Options Update features Boston Scientific The Boston Scientific Corporation (NYSE: BSX) (abbreviated BSC), is a worldwide developer, manufacturer and marketer of medical devices whose products are used in a range of interventional medical specialties, including interventional cardiology, peripheral interventions, (NYSE NYSE See: New York Stock Exchange :BSX BSX Bermuda Stock Exchange BSX Bandai Satellaview-X BSX Bicycle Super-X (Cross) ). The Midday Options Update 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 www.SchaeffersResearch.com - the home of Bernie Schaeffer and Schaeffer's Investment Research. 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 and get entered to win an iPod Nano A flash-based digital music player from Apple, introduced in 2005. Like larger iPod models, the nano has a color screen. Although the nano name suggests ultra-small "nanotechnology," the iPod shuffle is actually smaller. See iPod. . http://www.schaeffersresearch.com/redirect.aspx?CODE=PRMOU13M&PAGE=1. Options Update: Can Call Buyers Take Heart in Boston Scientific? Economic news was heavy this morning, so let's dig right in. According to according to prep. 1. As stated or indicated by; on the authority of: according to historians. 2. In keeping with: according to instructions. 3. the Commerce Department, the U.S. economy grew at a two-percent real seasonally adjusted Seasonally adjusted Mathematically adjusted by moderating a macroeconomic indicator (e.g., oil prices/imports) so that relative comparisons can be drawn from month to month all year. annual rate during the third quarter. This reading is slightly lower than the previously estimated 2.2 percent growth. The "big picture" from today's third, and final, estimate of the gross domestic product (GDP GDP (guanosine diphosphate): see guanine. ) is little changed from last month's report. In addition, the Conference Board today announced that the index of leading economic indicators index of leading economic indicators An index that is compiled by the Conference Board, a private-sector consulting firm. The index is designed to indicate the future direction of economic activity. increased 0.1 percent in November, matching economists' expectations. Four of the 10 leading indicators increased in November: money supply, vendor performance, core capital goods Capital Goods Any goods used by an organization to produce other goods. Notes: Examples of capital goods include office buildings, equipment, and machinery. See also: Capital Expenditure, Disinvestment Capital goods orders, and stock prices. One-half of the 10 indicators contracted: jobless claims Initial Jobless Claims is a report issued by the U.S. Department of Labor on a weekly basis. This report tracks how many people have filed for unemployment benefits in the previous week. It is a good gauge of the U.S. job market. , building permits, interest rate spread, the factory workweek, and consumer expectations. Orders for consumer goods consumer goods Any tangible commodity purchased by households to satisfy their wants and needs. Consumer goods may be durable or nondurable. Durable goods (e.g., autos, furniture, and appliances) have a significant life span, often defined as three years or more, and held fast. The final tidbit of economic news came courtesy of the Labor Department The Department of Labor (DOL) administers federal labor laws for the Executive Branch of the federal government. Its mission is "to foster, promote, and develop the welfare of the wage earners of the United States, to improve their working , which reported that the number of workers filing initial claims for jobless benefits increased by 9,000 last week. Continuing jobless claims increased 2.52 million, which is the highest amount since January. The four-week moving average of continuing claims hit its highest point since February 25. Most-Active Options Update At 12:56 pm Eastern Time, the Dow Jones Industrial Average Dow Jones Industrial Average The best known U.S. index of stocks. A price-weighted average of 30 actively traded blue-chip stocks, primarily industrials including stocks that trade on the New York Stock Exchange. (DJIA DJIA See Dow Jones Industrial Averager (DJIA). - 12,418.3) is 45.9 points lower, while the S&P 500 Index (SPX (Sequenced Packet EXchange) The transport layer protocol in the NetWare operating system. Similar to the TCP layer in TCP/IP, it ensures that the entire message arrives intact. SPX uses NetWare's IPX as its delivery mechanism. - 1,418.99) has slipped 4.54 points. The Nasdaq Composite (COMP - 2,418.3) has slipped 9.3 points. At 12:57 p.m. Eastern Time, 2,072,607 calls have changed hands compared to 1,453,316 puts, equaling a single-day put/call volume ratio of 0.70. The CBOE's equity put/call volume ratio stands at 0.66, while the ISE's ratio weighs in at 0.80. Boston Scientific This morning, the Cleveland Clinic confirmed a report that it has entered into a stent-supply contract with Boston Scientific (NYSE:BSX), but stated that the deal wasn't exclusive and that BSX is just a "preferred" supplier. According to a spokeswoman for the clinic, BSX and the clinic agreed to an 18-month stent-supply contract on September 1, and that the contract is already in effect. Doctors can choose to use other stents if they find it necessary. This news spurred a spate of activity on the company's January 17.50 call (BSXAW), which landed the contract on our notably active options chart. This contract is now the site of peak call open interest in the January series, which could add a layer of options-related resistance to the stock's trek higher. And that may be the last thing BSX needs. Let's take a look... Notice that the 17.50 level has provided an impenetrable barrier since July. This addition of potential options-related resistance could be too much for the stock to break through. Let's look at a weekly chart and see if there is some level of support to help the stock break through 17.50. See that sharply descending trendline? That is BSX's 50-week moving average, which it has not closed above since October 2004. This moving average is rapidly descending and is aimed directly at the 17.50 level. This combination of overhead resistance may be too much for the stock. Surely, there is some support on BSX's monthly chart. Well, there isn't, and don't call me Shirley. In fact, the picture is quite the opposite. The sultan of stents faces nearly unbreakable overhead resistance in the form of its 10-month moving average. The last time BSX finished a month above this trendline was June 2004. The bad news (as if this wasn't already bad enough) is that this trendline is currently positioned at the 18 level and is in a direct dive lower. Maybe there is some potential short-covering support in BSX's sentiment backdrop... not so fast my friend. Two percent of BSX's float is sold short, and it would take two days to buy back these shorted shares at the equity's average daily trading volume Trading volume The number of shares transacted every day. As there is a seller for every buyer, one can think of the trading volume as half of the number of shares transacted. That is, if A sells 100 shares to B, the volume is 100 shares. . Okay, how about the analysts; surely they are bearish toward BSX, allowing for buying pressure to creep into the picture. There you go again; wrong, and calling me Shirley. BSX's Schaeffer's put/call open interest ratio of 0.36 is lower than 88 percent of those taken during the past 52 weeks. This percentile ranking means that the speculative options crowd is near an optimistic extreme toward the company. Analyst rankings could provide a bit of a boost. According to Zacks, 12 of the 19 analysts following BSX rate it a "hold" or worse. Should this group have a change of heart and issue upgrades, the stock could advance, but will it be enough to break through the various layers of overhead resistance? I wouldn't hold my breath. BSX's long-running downtrend downtrend A series of price declines in a security or the general market. Many analysts feel that investors should avoid securities in a downtrend until the pattern is broken. Compare uptrend. in the face of heavy optimism earns it a Schaeffer's Equity Scorecard rating of 3.0 out of a possible 10. This low rating suggests that BSX will find less resistance to a continued slump. Click here to see a Daily Chart of BSX Since June 2006, Weekly Chart of BSX Since January 2004 With 50-Week Moving Average, and a Monthly Chart of BSX Since January 2004 With 10-Month Moving Average: http://www.schaeffersresearch.com/wire?ID=17929. The best way to take advantage of the timely Schaeffer commentaries is to sign up to receive 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 and get entered to win an iPod Nano. http://www.schaeffersresearch.com/redirect.aspx?CODE=PRMOU13M&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. |
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