Schaeffer's Midday Options Update Features Sirius Satellite Radio, XM Satellite Radio Holdings, Albertson's, Adobe Systems, and J.P. Morgan Chase.CINCINNATI -- Today's Schaeffer's Midday Options Update features Sirius Satellite Radio
in full National Association of Securities Dealers Automated Quotations U.S. market for over-the-counter securities. Established in 1971 by the National Association of Securities Dealers (NASD), NASDAQ is an automated quotation system that reports on :SIRI), XM Satellite Radio Holdings (NASDAQ:XMSR XMSR XM Satellite Radio (formerly AMRC) ), Albertson's (NYSE NYSE See: New York Stock Exchange :ABS), Adobe Systems (NASDAQ:ADBE ADBE Adobe Systems, Inc. (stock symbol) ), and J.P. Morgan Chase (NYSE:JPM JPM J. P. Morgan Chase & Co. (stock symbol) JPM Juan Pablo Montoya (formula 1 driver) JPM Jabatan Perdana Menteri (Malaysia) JPM Journal of Property Management ). 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. 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=PRMOU12M&PAGE=1 . Options Update: Chasing Down Sentiment on J.P. Morgan Chase The Commerce Department announced this morning that the U.S. current account deficit dropped by one full percentage point. The narrowing to $195.8 billion was attributed to payments collected from foreign insurance companies for hurricane-related damage. This drop in the third quarter marks the second straight quarter that the deficit narrowed. Crude is losing steam for a third straight session today and is now trading at its lowest levels in roughly a week. The drop is attributed to a warmer forecast for the western U.S. This forecast was enough to offset signs that the arctic blast hitting two-thirds of the country is not ready to give in yet. Black gold has dropped $1.34 per barrel to trade at $58.65 per barrel. OPEC OPEC: see Organization of Petroleum Exporting Countries. OPEC in full Organization of the Petroleum Exporting Countries Multinational organization established in 1960 to coordinate the petroleum production and export policies of its also released its monthly report this morning, in which the cartel upped its demand forecast for 2005 and 2006. Satellite In My Eyes In My Eyes was a Boston straight edge band that spearheaded the 1997 youth crew revival along with Ten Yard Fight, Bane, The Trust, Fastbreak and Floorpunch. The band and its members were a part of the hot bed that was the Boston music scene in the late 90's and early 2000's. Sirius Satellite Radio (NASDAQ:SIRI) and XM Satellite (NASDAQ:XMSR) couldn't escape the wrath of J.P. Morgan today. The brokerage downgraded both of the high-flying radio providers on the belief that the industry faces near-term challenges to subscriber growth. SIRI was cut to "underweight Underweight An situation where a portfolio does not hold a sufficient amount of securities to satisfy the accepted benchmark of the portfolio's asset allocation strategy. Notes: " from "neutral" as the brokerage noted its comparable subscribership numbers after the first quarter of 2006 are going to get tougher for the company. Morgan also stated that the valuation disparity between SIRI and XMSR has become a challenge. J.P. Morgan then turned the downgrade stick on XMSR, cutting it to "neutral" from "overweight." The move lower was attributed to the fact that the latest store checks seem to indicate that Howard Stern's rather ballyhooed move to SIRI is giving it a lead in retail sales for the fourth quarter. ABS of Steel According to today's Wall Street Journal, anonymous sources note that an investment group is set to win the auction to acquire Albertson's (NYSE:ABS). The acquisition appears to carry a price tag of $9.6 billion, or $26 per ABS share. The investment group includes Cerberus Capital, real-estate investment trust Kimco Realty Corp. (KIM), and Supervalu (SVU SVU Special Victims Unit SVU Southern Virginia University (Buena Vista, Virginia) SVU Society for Vascular Ultrasound SVU Sri Venkateswara University (Tirupati, India) SVU Syrian Virtual University ). The Journal added that a formal announcement could come sometime after ABS's board meeting this weekend. An Acrobatic Move Adobe Systems (NASDAQ:ADBE) somersaulted to a new four-year high this morning, thanks to a net profit jump of 38 percent. Continued strong demand for the company's document-management and design software product lines Software Product Lines, or software product line development, refers to engineering methods, tools and techniques for creating a collection of similar software systems from a shared set of software assets using a common means of production. helped spur the company to the impressive gains. The company also issued an upbeat forecast for 2006, thanks to its purchase of Macromedia. Excluding items, ADBE raked in 30 cents per share Cents per share The amount of a mutual fund's dividend or capital gains distributions that a shareholder will receive for each share owned. in the fourth quarter, one cent better than the Street's expectations. Turning an eye to 2006, ADBE forecast earnings between $1.26 and $1.30 per share. The lower end of this forecast range is one cent better than the consensus estimate. ADBE has added more than 10 percent in trading thus far today. Most-Active Options Update At 2:07 p.m. 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). - 10,908.6) has added 0.25 percent. 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. - 1,271.66) has tacked on 0.06 percent, and the Nasdaq Composite (COMP - 2,258.8) has lost 0.08 percent. At 2:08 p.m. Eastern time, 3,096,844 calls have changed hands compared to 1,760,734 puts, equaling a single-day put/call volume ratio of 0.56. The CBOE's equity put/call volume ratio weighed in at 0.57. J.P. Morgan Chase Yesterday, J.P. Morgan Chase (NYSE:JPM) announced that it would pay $633 million in cash to purchase Collegiate Funding Services (CSFI CSFI Central (Point) Sequential Fuel Injection CSFI Centre for the Study of Financial Innovation (London, England) CSFI Counter-Strike Finland (gaming clan) ). This move will allow the financial services behemoth behemoth (bē`hĭmŏth, bĭhē`–) [Heb.,=plural of beast], large, fanciful primeval monster, like Leviathan, evoking the hippopotamus mentioned in the Book of Job. to move into student lending. JPM stated that it offered $20 per share, which is a 31-percent premium over Wednesday's closing price for CFSI CFSI Congressional Fire Services Institute CFSI Center for Financial Services Innovation CFSI Children's Film Society of India CFSI Comité Français de La Semoulerie Industrielle (French: French Committee of the Semolina Industry; Paris, France) . JPM stated that the purchase will "help create a comprehensive education finance business." JPM's December 35 call (JPMLG) and January 35 call (JPMAG) have seen heavy activity today. It appears that these options players are looking to cash in on some of the momentum JPM gained yesterday. However, it appears that the move higher may be in for a rocky ride. The 40 level is the site of peak open interest in January, with more than 73,000 contracts residing at this strike. There is also heavy call accumulation in the March and June series (the next two available) at this strike. Look at a monthly chart of JPM and you will see how firm the resistance of the 40 level has been. Since October 2002, the financial giant has managed two monthly closes above this level. What's more, it is this level that has put a stop to the company's current advance. However, notice that the stock's 10-month moving average has taken a turn up and looks to be in position to make a run at a bullish cross of its 20-month counterpart. Should this cross happen, the equity may find enough momentum to break through this staunch resistance. Turning to a weekly chart, notice the strength of the 40 level. What also needs to be noticed is the bullish cross that has already been completed by JPM's 10-week moving average. Technically, a bullish crossover usually signals a continued uptrend, will this momentum carry JPM higher? One thing that seems certain is the support of JPM's 10-week moving average, it has been nine weeks since the shares dropped below this support. It is possible that this support will help carry JPM over the threshold of the 40 level. As far as the sentiment of the options pits goes, today's Schaeffer's put/call open interest ratio (SOIR SOIR Schaeffer's Put/Call Open Interest Ratio SOIR Simultaneous Operations on Intersecting Runways ) of 0.79 rates lower than 65 percent of the readings taken during the past 52 weeks. Of course, today is options expiration (in fact, it is "quadruple witching Quadruple Witching A day on which contracts for stock index futures, stock index options, stock options, and single stock futures (SSF) all expire. Notes: This is similar to the triple witching hour, except that the quadruple witching hour sees also the expiry of SSFs. " day . . . boo) so Monday's number may be a bit different. As far as short interest goes, an 88.5-percent increase in pessimistic bets still leaves less than four days (but just slightly) to cover the shorted shares. Yes, this isn't normally considered enough to spark a short-covering rally, but it could give the shares enough of a boost to move them through the overhead resistance. According to Zacks, 10 of the 17 analysts covering JPM rate it a "hold" or worse. This configuration allows room for upgrades. Should any of the 10 change their minds thanks to yesterday's announcement, JPM could break through the 40 level. Will the 40 level fall? There is potential, especially should the analysts change their minds. As a result JPM sports a Schaeffer's Equity Scorecard rating of 7.0 out of a possible 10. Click on the following link to access a Monthly Chart of JPM Since October 2002 With 10-Month and 20-Month Moving Averages: http://www.schaeffersresearch.com/wire?ID=14813 . 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. http://www.schaeffersresearch.com/redirect.aspx?CODE=PRMOU12M&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 . |
|
||||||||||||||||||
Printer friendly
Cite/link
Email
Feedback
Reader Opinion