Zacks.com Announces That Bernie Schaeffer Highlights Options for the Following Stocks: Beazer Homes USA, Southwest Airlines, and Tyco International.

CHICAGO -- Read about ETF activity that Bernie Schaeffer refers to as "structural shorting" and learn about options for Beazer Homes USA (NYSE:BZH), Southwest Airlines (NYSE:LUV), and Tyco International (NYSE:TYC). Bernie Schaeffer is the editor of Bernie Schaeffer's Option Advisor newsletter. Click here for the full story exclusively on Zacks.com: http://at.zacks.com/?id=84

Highlights from the June issue, dated May 26th, Featured Expert column by Bernie Schaeffer include:

The Market

"Volatility spike lite"? The CBOE Volatility Index (VIX) hit a nine-year low of 10.90 in February 2005 and then proceeded to spike higher before peaking in April at 18.59. While this latest mini-spike, ostensibly driven by concerns about corporate debt downgrades and potential hedge fund blowups, looks a bit more robust on the chart than the 2005 spikes that preceded it, it barely managed to dent the two-year downtrend in volatility that has been regularly capped at the declining 80-week moving average.

And a chart reader would likely conclude we are on our way to fresh lows in the VIX as part of the ongoing "lower highs and lower lows" pattern. Clearly, the 2005 version of "investor panic" (a term used by a major Wall Street firm to describe the most recent market pullback) when compared to the panics of the 1990s, the panic of 2002, and the "mother of all panics" in 1987 does little justice to the word "molehill" in the "mountain vs. molehill" cliche.

But at the same time, one cannot rule out for the shorter term the possibility of a single digit VIX that will likely be accompanied by new market highs. This bullish argument is in fact supported by the sentiment reflected in the broad market ETFs such as the SPY, whose short interest has increased to record levels and whose put/call ratio continues to record new highs. I refer to such activity on the wildly popular ETFs as "structural shorting," and these structural shorts have in my opinion been the single most important source of support for this market.

Aggressive Portfolio

Beazer Homes USA - EXPECTATIONALANALYSIS(R): (NYSE:BZH) continues to be a stellar performer from both a fundamental and technical perspective. At the end of April, the firm reported strong earnings and lifted its earnings guidance for 2006.

Southwest Airlines - EXPECTATIONALANALYSIS(R): (NYSE:LUV) is certainly receiving amorous feelings from the investing public lately. Despite a more than five percent increase in short interest during May, it would still take less than three days to cover the 12.66 million LUV shares sold short, lessening the potential impact of any covering rally. Technically speaking, LUV is battling resistance at its 10-month and 20-month moving averages, and has been stuck in a trend of setting lower highs since peaking in December 2000.

Tyco International - EXPECTATIONALANALYSIS(R): (NYSE:TYC) has found itself in some tough technical times as it resides below all of its short-, intermediate-, and long-term trendlines. What's more, this is the first time that TYC has traded below both its 10-month and 20-month moving averages since May 2003. On a shorter-term basis, the shares have been in a solid downtrend under resistance at their 10-day and 20-day trendlines since early March, losing more than 19 percent in the process. While TYC hasn't wowed anyone with its technical prowess, calls still outnumber puts nearly three to-one in the front three months of options. Additionally, TYC's short-interest ratio sits at a paltry 2.84 days to cover, limiting any short-covering potential.

Read Bernie's complete market commentary and get specific option recommendations on the stocks above as well as other stocks by clicking: http://at.zacks.com/?id=85

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