Schaeffer's Street Chatter Highlights the Following Stocks: Microsoft, Gilead Sciences, Chevron, and Automatic Data Processing.
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Microsoft: Software giant Microsoft (NASDAQ:MSFT) is the big news story on Friday, as the company's earnings report, issued Thursday evening, failed to pass muster on the Street. The stock has dropped more than 11 percent this morning and has tagged a new annual low. As Bernie Schaeffer pointed out in a Gold Dust posting last night, call open interest has had the upper hand on MSFT, suggesting complacency ahead of this earnings report. In fact, Schaeffer's put/call open interest ratio (SOIR) for MSFT heading into this report was at an annual low. The shares have now plunged below any conceivable level of put support, as there is virtually no open interest beneath the 27.50 put strike in the May, June or July series.
Gilead Sciences: Gilead Sciences (NASDAQ:GILD) dropped on Wednesday as the result of a brokerage downgrade, and came within striking distance of support at its 160-day moving average. This short-term trendline appears to be keeping any further downside in check. Meanwhile, on the options front, puts are being piled on at the out-of-the-money June 55 strike, pushing the equity's SOIR higher. If the stock continues to stabilize at current levels, it could be an attractive bullish addition for your portfolio.
Click the following link to see a daily chart of Gilead Sciences since December 2005 with 160-day moving average: http://www.schaeffersresearch.com/wire?ID=15896 .
Chevron: Chevron (NYSE:CVX) visited the earnings confessional today, reporting first-quarter results that topped analysts' expectations by two cents. The stock has trended higher along its 10-day and 20-day moving averages since mid-March. Currently, CVX is flirting with the 62 level, which defined a short-term peak for the shares in late January. The stock has cleared the potential obstruction created by the May 60 strike, which is home to nearly 24,000 call positions. The next challenge for CVX is the June 65 mark, at which more than 27,000 call contracts currently reside. A solid move through this barrier would effectively usher the stock into new all-time high territory.
Click the following link to see a daily chart of Chevron since January 2006 with 10-day and 20-day moving averages: http://www.schaeffersresearch.com/wire?ID=15896 .
Automatic Data Processing: Automatic Data Processing (NYSE:ADP) reported third-quarter earnings today that topped analyst per-share expectations by a penny; the company's sales rose 10 percent to $2.44 billion, which was, however, shy of Wall Street's consensus view of $2.53 billion. The stock is currently lower by more than three percent but has tested its 80-week moving average. This trendline helped function as a springboard in early February, when the stock pulled lower. Ahead of this release, options players opened roughly 1,000 new put positions at the now in-the-money May 47.5 strike. This strike is notable from a call perspective as well, as it represents the site of heaviest open interest in the front-month series, home to more than 11,000 call contracts.
Click the following link to see a weekly chart of Automatic Data Processing since July 2005 with 80-week moving average: http://www.schaeffersresearch.com/wire?ID=15896 .
Click the following link to see May's open-interest configuration for Automatic Data Processing: http://www.schaeffersresearch.com/wire?ID=15896 .
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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 .
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|Date:||Apr 28, 2006|
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