DJIA Heads for Minor Gains as Jobless Claims Fall by 6,000

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Good morning! The Dow Jones Industrial Average (DJIA) is headed for an opening gain of about 16 points, as Wall Street digests a decline in weekly jobless claims and a 1.8% drop in second-quarter productivity. As for the S&P 500 Index (SPX), futures on the broad-market index are pointing toward an opening gain of roughly 3 points, compared to indications for an advance of about 2 points earlier this morning.

If you checked in with Opening View this morning, you know that the Dow comes into today trading back above support in the 10,250 region and its 50-day moving average. More stalwart support lies in the 10,150-10,100 region, while resistance could materialize near 10,350. As for the SPX, the index is currently capped by its 20-day and 50-day moving averages, with additional resistance in the 1,085 region. Support, meanwhile, lies in the 1,070 region.

Taking a closer look at this morning's economic data, the Labor Department reported that initial jobless claims fell by 6,000 to 472,000 in the latest week. The four-week average of initial claims declined 2,500 to 485,500. Overall, 9.7 million people were collecting some type of unemployment benefits last week, down from 10.1 million on an unadjusted basis.

Also, productivity fell a revised 1.8% in the second quarter, doubling initial estimates from the Labor Department. Worker output grew at a slower pace, with real output rising just 1.6% in the second quarter, compared to the prior estimate of 2.6%. Hours worked rose at a 3.5% annualized rate - the fastest in four years.

Interested in having my pre-market analysis delivered directly to your inbox before the market opens? Then Sign Up Here for free daily delivery of Schaeffer's Opening View.

-posted by Joseph Hargett (jhargett@sir-inc.com)
9/2/2010 8:40 AM

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Stocks Advancing Amid Heavy Short Interest: First Bancorp Holding Co., Novavax Inc., G-III Apparel Group Ltd., Jos. A. Bank Clothiers

9/2/2010 8:48 AM

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Keywords:

FBP

NVAX

GIII

JOSB

As explained in our education section, short interest is a useful sentiment indicator that measures the level of investor pessimism toward a stock. While it isn't always a simple "long only" indicator, it can give you insight into situations where you might see concentrated buying demand. The purpose of this post is to highlight heavily-shorted stocks that could be in the midst of a potential short covering rally. More details about the methodology are listed below.

Methodology - the query scans a database of companies which has some basic filters to eliminate stocks that don't trade frequently. The table above is a filtered list of stocks that have at least 10% of their float sold short and showed a gain in the previous trading day. This can be used as a tool for finding situations where stocks with heavy short interest have begun to move.

Companies included in today's scan are: First Bancorp Holding Co. (FBP), Novavax Inc. (NVAX), G-III Apparel Group Ltd. (GIII), Jos. A. Bank Clothiers (JOSB), Blue Coat Systems Inc. (BCSI), KB Home (KBH), Bon Ton Stores Inc. (BONT), Orient Express Hotels Ltd. (OEH), Emeritus Corp. (ESC), MGIC Investment Corp. (MTG), Longtop Financial Tech Limited (LFT), Officemax Inc. (OMX), Beazer Homes USA Inc. (BZH), M&F Worldwide Corp. (MFW), Talbots Inc. (TLB), Wabash National Corp. (WNC), Arvinmeritor Inc. (ARM), Fuqi International, Inc. (FUQI), Select Comfort Corp. (SCSS), Cirrus Logic Inc. (CRUS), A123 Systems Inc. (AONE), Lodgenet Interactive Corp. (LNET), Powerwave Technologies Inc. (PWAV), Eastman Kodak Co. (EK), Patriot Coal Corp. (PCX).

-posted by Joseph Hargett (jhargett@sir-inc.com)
9/2/2010 8:48 AM

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Option Skews - Relatively Heavy Call Activity on Ford Motor Company, Brocade Communication Systems Inc., CVS Caremark Corp., and Research In Motion Limited

9/2/2010 9:15 AM

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F

BRCD

CVS

RIMM

Ford Motor Company (F), Brocade Communication Systems Inc. (BRCD), CVS Caremark Corp. (CVS), and Research In Motion Limited (RIMM) were among those stocks seeing a skew toward call buying on Wednesday.

Call options dominated the landscape for Ford Motor Company (F) on the International Securities Exchange (ISE) yesterday, with more than 19,000 of these bullishly oriented contracts changing hands. Not all of F's options volume was bullish on Wednesday, as my colleague Andrea Kramer can attest to. Driving yesterday's activity was a broad rally in the overall market, and a somewhat solid August sales report. Specifically, F said that August sales were down 5% from July, but that year-to-date fleet sales were up 35%, while commercial fleet sales were up 82% from the same period last year.

Brocade Communications Systems Inc. (BRCD) has seen unusually heavy call volume recently, and this trend continued into Wednesday's activity. Nearly 7,000 calls changed hands on BRCD, even though the stock was not the subject of any significant headline news. Short sellers could be one driver for the recent call attention, as more than 4% of the stock's float is currently sold short. With BRCD reclaiming long-term support in the $5 region, these short sellers may be hedging their bets against a continued rally in the stock.

Finally, Research In Motion Limited (RIMM) was another favorite among ISE call buyers yesterday, despite receiving a downgrade to "market perform" from "outperform" at JMP Securities. Technically, RIMM is trading below long-term support/resistance in the $45 region.

This filtered scan is based on the International Securities Exchange (ISE) buy-to-open data. It looks for stocks where the previous day's call volume on the ISE is at least twice as great as the put volume. It then sorts the stocks based on the call volume. Since this is buy-to-open data, this can be a good source for finding stocks where optimism is emerging. Of particular interest to me would be situations where we see call activity on stocks that are still in intermediate-term downtrends. This would be a potentially cautionary sign from the contrarian perspective

Other companies seeing a skew towards calls in the previous session: Citigroup Inc. (C), Bank Of America Corp. (BAC), Microsoft Corp. (MSFT), Transocean Ltd. (RIG), Las Vegas Sands Corp. (LVS), Novartis AG (NVS), MGIC Investment Corp. (MTG), Intel Corp. (INTC), Burger King Holdings, Inc. (BKC), Coinstar Inc. (CSTR), QUALCOMM Inc. (QCOM), Cisco Systems Inc. (CSCO), JPMorgan Chase & Co. (JPM), Sonus Networks Inc. (SONS), Foster Wheeler AG (FWLT), Symantec Corp. (SYMC), Sotheby 's (BID), Finisar Corporation (FNSR), Gap Inc. (GPS), Savient Pharmaceuticals (SVNT), Auxilium Pharmaceuticals (AUXL).

-posted by Joseph Hargett (jhargett@sir-inc.com)
9/2/2010 9:15 AM

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Option Skews - Relatively Heavy Put Activity on Advanced Micro Devices Inc., Petroleo Brasileiro SA, Caterpillar Inc., and Rowan Companies Inc.

9/2/2010 9:35 AM

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Keywords:

AMD

PBR

CAT

RDC

Advanced Micro Devices Inc. (AMD), Petroleo Brasileiro SA (PBR), Caterpillar Inc. (CAT), and Rowan Companies Inc. (RDC) were among those stocks that saw a skew toward put buying on Wednesday.

International Securities Exchange (ISE) options traders appear to have shifted their focus toward technology stocks and the oil sector, which is a bit of an oddity given that just two days ago, call buying was heavy on both of these groups. However, given that the SPDR Technology Fund (XLK) and the Oil Service HOLDRS Trust (OIH) rallied 2.5% and 5.1%, respectively, on Wednesday, it makes me wonder if we are looking at smart money here.

Advanced Micro Devices Inc. (AMD) heads up our put skews listing, with more than 8,100 puts purchased in the wake of Credit Suisse's downgrade of the semiconductor sector. In a note to clients, the brokerage firm cut the group to "market weight" from "overweight, citing "a clear weakening of orders for computers and electronic products in data for June and July." AMD still joined in yesterday's rally, but remains trapped below its 10-day moving average, which has pressured the shares lower since late July.

Petroleo Brasileiro SA (PBR) could be in trouble this morning, as the stock has gained more than 2% in pre-market trading after the company announced details of a $43 billion oil-for-shares swap linked to a stock offering expected later this month. The shares have gapped above former resistance in the $35.50 region in early trading.

Finally, shares of Rowan Companies Inc. (RDC) are trading nearly 1% higher this morning, after RBC Capital lifted its price target to $31 per share from $28 per share. RDC has broken out above former resistance in the $28 region as a result, potentially putting pressure on yesterday's put buyers.

This filtered scan is based on the International Securities Exchange (ISE) buy-to-open data. It looks for stocks where the previous day's put volume on the ISE is at least twice as great as the call volume. It then sorts the stocks based on the put volume. Since this is buy-to-open data, this can be a good source for finding stocks where skepticism is emerging. Of particular interest to me would be situations where we see put activity on stocks that are still in intermediate-term uptrends. This would be a potentially encouraging sign from the contrarian perspective.

Other companies seeing a skew towards puts in the previous session: Oracle Corporation (ORCL), Nokia Corp. (NOK), Texas Instruments Inc. (TXN), Macy's Inc. (M), Monsanto Co. (MON), F5 Networks Inc. (FFIV), Silver Wheaton Corp. (SLW), Silver Standard Resources (SSRI), Lam Research Corp. (LRCX), Frontline Ltd. (FRO), Starwood Hotels & Resorts (HOT), Precision Castparts Corp. (PCP), LDK Solar Co., Ltd. (LDK), Atheros Communications, Inc. (ATHR), Vale S.A. (VALE), Virgin Media Inc. (VMED), Corning Inc. (GLW), Moody'S Corporation (MCO), Juniper Networks Inc. (JNPR), Lexmark International Inc. (LXK), Annaly Capital Management (NLY).

-posted by Joseph Hargett (jhargett@sir-inc.com)
9/2/2010 9:35 AM

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Hot Stocks: Movado Group Inc. and Burger King Holdings Inc.

9/2/2010 10:56 AM

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MOV

BKC

DJIA

The Dow Jones Industrial Average (DJIA) is trading in a tight range between support at its 50-day moving average and resistance in the 10,300 region today, with Wall Street reluctant to take a firm stance ahead of tomorrow's nonfarm payrolls report. Even a drop in weekly jobless claims and a rise in new home sales hasn't been enough to kick the bulls into rally mode. Checking in on the New York Stock Exchange (NYSE), we find that 1,898 stocks are trading in positive territory, while 918 are firmly in the red. On the upside, we have Burger King Holdings Inc. (BKC), with a gain of more than 24%, while Movado Group (MOV) is leading the way lower with a loss of nearly 9%.

3G Capital is about to "have it their way," after the company offered $24 per share, or $4 billion, for Burger King Holdings Inc. (BKC). Shares of the flame-broiled firm have rocketed more than 24% higher following the buyout bid, with BKC tagging an annual high of $23.50 per share. Today's rally brings BKC's two-day gain to more than 42%, as the stock rallied sharply on Wednesday due to buyout speculation.

Sentiment toward the shares is somewhat mixed. BKC's Schaeffer's put/call open interest ratio (SOIR) of 0.37 ranks below 77% of all those taken in the past year, while 14 of the 18 analysts following the stock rate it a "hold." Short sellers apparently saw a rally coming, as the number of BKC shorted shares plunged by 22.6% during the most recent reporting period. With more than 3% of BKC's float sold short, these bears could be in for considerable pain unless they hedged their bets by buying calls ahead of the buyout.

Investors just don't have time for watchmaker Movado Group Inc. (MOV) today, as the stock has plunged nearly 9% in response to the company's third-quarter earnings report. According to MOV, the company swung to a loss of 85 cents per share from a profit of 62 cents per share last year. Excluding items, MOV would have earned 12 cents per share, whiffing the consensus estimate for a profit of 62 cents per share. The company also lowered its fiscal 2010 forecast to a loss ranging from $1.40 to $1.50 per share, compared to analyst expectations for a full-year profit of 46 cents per share.

Today's plunge has pushed MOV back below former support at the $10 region. This area could now become a sticking point for the equity. Call options are currently quite popular on the security, as its SOIR of 0.11 ranks below 92% of all those taken in the past year. However, with short interest accounting for nearly 7% of MOV's total float, many of these calls could be hedges for short positions.

-posted by Joseph Hargett (jhargett@sir-inc.com)
9/2/2010 10:56 AM

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Human Genome Sciences Options Trader Bets on Stagnation

9/2/2010 11:18 AM

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HGSI

Are Human Genome Sciences Inc. (HGSI) shares caught in a trading range? At least one options trader thinks so. A block of 3,859 September 29 puts traded at 10:23 a.m. Eastern time on the New York Stock Exchange (NYSE) for the bid price of $0.55, or $55 per contract. At the same time, a block of 3,859 contracts September 31 calls crossed the tape for the bid price of $0.50, or $50 per contract. With both blocks marked "spread," it is likely that we are looking at the initiation of a short strangle on HGSI.

The trade breaks down like this: the trader receives a net credit of $1.05, or $105 per contract, for selling both the September 31 call and 29 put. However, he will only be able to keep the entire premium if HGSI closes between the $29 and $30 levels when September options expire on the 17th.

There is a little leeway, thought, as the breakeven points for the trade rest at $32.05 on the upside, and $27.95 on the downside. Any close outside of these breakeven points results in a loss on the trade. What's more, these losses could be potentially extreme, as there is no limit to how high HGSI can rally under the right circumstances.

-posted by Joseph Hargett (jhargett@sir-inc.com)
9/2/2010 11:18 AM

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It's Been a Tumultuous Week for Saks Incorporated -- Yet Little Has (Technically) Changed

9/2/2010 12:59 PM

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SKS

The retail sector is front-and-center today, with many reporting better-than-expected August same-store sales. Unfortunately, accessory king Saks Incorporated (SKS) did not follow this trend, with the retailer reporting that its same-store sales increased just 1% in August -- well beneath the consensus estimate of 4.3%.

SKS has been making headlines recently for other reasons, too. On Monday, rumors swirled that the company could be Wall Street's next acquisition target.

However, this roller-coaster week has done little to affect SKS, which still remains stuck beneath its 20-week moving average. This troublesome trendline, located around $8.50, has resisted the stock's rally attempts since mid-June.

Turning to today's activity, roughly 10,000 contracts have changed hands so far -- already three times the retailer's expected single-session volume. The September 7 put seems to have struck a chord with traders, as 8,384 contracts have traded on this strike -- 93% of which changed hands at the bid price, revealing they were likely sold. With today's volume exceeding open interest at this strike, it seems that a portion of these puts were, in fact, sold to open.

In other words, it appears that some traders are counting on the $7 level to provide support for SKS in the coming weeks. SKS is currently perched at $7.93.

-posted by Sarah Wasserman (swasserman@sir-inc.com)
9/2/2010 12:59 PM

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Gulf Explosion Prompts Spike in Mariner Energy and Apache Put Volume

9/2/2010 3:08 PM

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APA

ME

As I'm sure you've heard by now, an explosion at an oil rig in the Gulf of Mexico is threatening to create another oil slick. The Mariner Energy Inc. (ME) rig exploded early this morning; all 13 crew members are now believed safe. According to the latest reports, there is a mile-long oil sheen spreading from the gulf platform. (UPDATE: Later reports referred to a fire on the rig, but it was unclear whether the fire was caused by an explosion.)

The explosion didn't go unnoticed by traders on Wall Street. ME has seen its put volume surge to more than 60,000 contracts, or about 355 times the stock's daily average volume. Nearly all of these options, 83% according to WhatsTrading.com, have been on the put side. The most popular is the September 20 put, where 26,664 contracts have changed hands on open interest of 575 contracts. Meanwhile, the September 22.50 put has seen 10,679 contracts trade.

Apache Corp. (APA) has also been heavily targeted by put traders. In April, APA offered to buy ME for $3.9 billion, including the assumption of $1.2 billion in debt. The deal is still pending, but that hasn't stopped options traders from sending more than 48,000 contracts across the tape - more than sextupling the stock's daily average volume of just 7,647 contracts. Like ME, most of this activity, 67.6%, has taken place on the put side.

At last check, ME had recovered from its earlier lows near $19.62 per share to trade down a mere 2.4%. APA was last seen down 1.8%.

-posted by Joseph Hargett (jhargett@sir-inc.com)
9/2/2010 3:08 PM

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LDK Solar Co. Ltd. Putting Pressure on Bears

9/2/2010 3:27 PM

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LDK

CSIQ

LDK Solar Co. Ltd. (LDK) is extending its recent rally today, by soaring more than 6% to challenge its August highs. The stock has received a boost during the past couple of days. This morning, the company said that a new solar cell manufacturing line is expected to reach 120 MW by the end of the third quarter. What's more, LDK announced yesterday that it was suing Canadian Solar Inc. (CSIQ) for breach of a 10-year supply contract.

The stock has attracted a fair amount of negativity from investors, despite the stock's recent resurgence. For instance, the stocks' Schaeffer's put/call open interest ratio (SOIR) of 1.93 indicates that puts nearly double calls among options with less than three months until expiration. This ratio also ranks above 75% of all those taken in the past year.

Additionally, short interest accounts for a whopping 21% of LDK's total float. This heavy bearish sentiment could bode well for LDK bulls. If the shares continue higher, bearish investors could be forced to buy back their bets, thus adding to the equity's growing upward momentum.

-posted by Joseph Hargett (jhargett@sir-inc.com)
9/2/2010 3:27 PM

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DJIA Futures Soar as U.S. Adds 67,000 Private Sector Jobs in August

9/3/2010 8:44 AM

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DJIA

SPX

VIX

Good morning! The Dow Jones Industrial Average (DJIA) is headed for an opening gain of nearly 100 points, as Wall Street cheers news that the U.S. economy added 67,000 private sector jobs in August. As for the S&P 500 Index (SPX), futures on the broad-market index are pointing toward a gain of more than 11 points, compared to indications for flat start to the session earlier this morning.

If you checked in with Opening View this morning, you know that both the DJIA and the SPX come into today trading above their respective 50-day moving averages. Additionally, the Dow has support at 10,150 and resistance at 10,450, while the SPX should find a floor near 1,080 and a ceiling near 1,100. Finally, the CBOE Market Volatility Index (VIX) closed below its 200-day moving average on Thursday. VIX watchers should keep an eye on this trendline, as well as resistance near the 28-29 level, should today's economic data disappoint.

Taking a closer look at this morning's economic data, the Labor Department reported that U.S. lost 54,000 nonfarm jobs in August, versus expectations for a drop of 105,000 jobs. Excluding census workers and other government employees, nonfarm payrolls expanded by 67,000 in August, more than doubling the consensus estimate for a 30,000 gain. The unemployment rate ticked higher to 9.6%, as expected. Average hourly earnings increased 3 cents, or 0.2% to $19.08, while the average workweek was unchanged at 34.2 hours.

Interested in having my pre-market analysis delivered directly to your inbox before the market opens? Then Sign Up Here for free daily delivery of Schaeffer's Opening View.

-posted by Joseph Hargett (jhargett@sir-inc.com)
9/3/2010 8:44 AM

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Stocks Advancing Amid Heavy Short Interest: Vitacost.com Inc., Compellent Technologies Inc., Orexigen Therapeutics, Jackson Hewitt Tax Services

9/3/2010 9:01 AM

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VITC

CML

OREX

JTX

Companies included in today's scan are: Vitacost.com Inc. (VITC), Compellent Technologies Inc. (CML), Orexigen Therapeutics (OREX), Jackson Hewitt Tax Services (JTX), Dineequity Inc. (DIN), Vivus Inc. (VVUS), Saks Inc. (SKS), Cepheid (CPHD), Poniard Pharmaceuticals Inc. (PARD), La-Z-Boy Inc. (LZB), Digital River Inc. (DRIV), Flotek Industries Inc. (FTK), USG Corp. (USG), McClatch Company (MNI), G-III Apparel Group Ltd. (GIII), Liz Claiborne Inc. (LIZ), Charming Shoppes Inc. (CHRS), Buckle Inc. (BKE), Gencorp Inc. (GY), Great Atlantic & Pacific Tea Co. (GAP), Beazer Homes USA Inc. (BZH), Gaylord Entertainment Co. (GET), Sourcefire Inc. (FIRE), LDK Solar Co., Ltd. (LDK), Solarfun Power Holdings Co. Ltd. (SOLF).

-posted by Joseph Hargett (jhargett@sir-inc.com)
9/3/2010 9:01 AM

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Option Skews - Relatively Heavy Call Activity on Brocade Communication Systems Inc. , Arena Pharmaceuticals Inc., Netflix Inc., and Microsoft Corp.

9/3/2010 9:30 AM

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Keywords:

BRCD

NFLX

ARNA

MSFT

Brocade Communication Systems Inc. (BRCD), Microsoft Corp. (MSFT)Arena Pharmaceuticals Inc. (ARNA), Netflix Inc. (NFLX), were among those stocks seeing a skew toward call buying on Thursday.

With Dell Inc. (DELL) bowing out of its bidding war with Hewlett-Packard Co. (HPQ) for 3PAR Inc. (PAR), many analyst have turned their attention to the rest of the network-storage sector for a possible replacement. Wedbush Securities analyst Kaushik Roy singled out Brocade Communication Systems Inc. (BRCD) as a solid alternative. "If Dell is following the footsteps of HP, then Dell should buy Brocade," Roy told Reuters on Thursday. The speculation surrounding BRCD was enough for traders on the International Securities Exchange (ISE) to buy-to-open more than 13,900 calls on the security. Since the bidding war for 3PAR began, BRCM has rallied more than 20%.

Arena Pharmaceuticals Inc. (ARNA) investors should expect to see more of the stock on our option skews listing as we approach Sept. 16. On this date, the Food and Drug Administration (FDA) will discuss the safety and efficacy of ARNA's application for its weight management drug lorcaserin hydrochloride (Lorqess). The stock has trended steadily lower since July 30, with resistance manifesting at the stock's 10-day moving average. This hasn't stopped options traders from snatching up call contracts, as evidenced by the more than 8,300 that were bought to open on the ISE yesterday.

Finally, Netflix Inc. (NFLX) has received some mixed attention recently. Despite the company's new partnership with Apple Inc. (AAPL) to stream content to the new Apple TV, analysts at ThinkEquity initiated coverage on the shares with a "hold" rating. Undeterred, NFLX bulls bought to open more than 5,000 calls on the ISE on Thursday. However, these call buyers may have more nefarious reasons for their purchases, as short interest jumped by more than 23% on NFLX during the most recent reporting period. Currently, about 23% of the stock's float has been sold short.

Other companies seeing a skew towards calls in the previous session: Citigroup Inc. (C), General Electric Co. (GE), Morgan Stanley (MS), Alcoa Inc. (AA), Burger King Holdings, Inc. (BKC), Research In Motion Limited (RIMM), Anadarko Petroleum Corp. (APC), Kohls Corp. (KSS), Abercrombie & Fitch Co. (ANF), F5 Networks Inc. (FFIV), Kinross Gold Corp. (KGC), Novartis AG (NVS), Home Depot Inc. (HD), EMC Corp. (EMC), Goodyear Tire & Rubber Co. (GT), Arcsight Inc. (ARST), Wells Fargo & Co. (WFC), Cree Inc. (CREE), Las Vegas Sands Corp. (LVS), United States Steel Corp. (X), Ford Motor Company (F).

-posted by Joseph Hargett (jhargett@sir-inc.com)
9/3/2010 9:30 AM

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Option Skews - Relatively Heavy Call Activity on Brocade Communication Systems Inc. , Arena Pharmaceuticals Inc., Netflix Inc., and Microsoft Corp.

9/3/2010 9:31 AM

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Keywords:

BRCD

NFLX

ARNA

MSFT

Brocade Communication Systems Inc. (BRCD), Microsoft Corp. (MSFT), Arena Pharmaceuticals Inc. (ARNA), and Netflix Inc. (NFLX), were among those stocks seeing a skew toward call buying on Thursday.

With Dell Inc. (DELL) bowing out of its bidding war with Hewlett-Packard Co. (HPQ) for 3PAR Inc. (PAR), many analysts have turned their attention to the rest of the network-storage sector for a possible replacement. Wedbush Securities analyst Kaushik Roy singled out Brocade Communication Systems Inc. (BRCD) as a solid alternative. "If Dell is following the footsteps of HP, then Dell should buy Brocade," Roy told Reuters on Thursday. The speculation surrounding BRCD was enough for traders on the International Securities Exchange (ISE) to buy-to-open more than 13,900 calls on the security. Since the bidding war for 3PAR began, BRCM has rallied more than 20%.

-posted by Joseph Hargett (jhargett@sir-inc.com)
9/3/2010 9:31 AM

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Option Skews - Relatively Heavy Put Activity on Intel Corp., Aruba Networks, Inc., Marriott International Inc., and National Bank Of Greece SA

9/3/2010 10:18 AM

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Keywords:

INTC

ARUN

MAR

NBG

Intel Corp. (INTC), Aruba Networks, Inc. (ARUN), Marriott International Inc. (MAR), and National Bank Of Greece SA (NBG) were among those stocks that saw a skew toward put buying on Thursday.

Intel Corp. (INTC) makes its second appearance on the put skews listing this week, with traders betting on a continued decline from the semiconductor manufacturer. Wednesday's sector downgrade by Credit Suisse is sure to have a lingering effect on options activity as well.

Finally, Aruba Networks Inc. (ARUN) is another repeat put skews offender, with traders sending more than 4,500 of these bearishly aligned contracts across the tape yesterday.

Other companies seeing a skew towards puts in the previous session: Macy's Inc. (M), Texas Instruments Inc. (TXN), LDK Solar Co., Ltd. (LDK), Freeport McMoRan Copper & Gold Inc. (FCX), Vale S.A. (VALE), First Solar Inc. (FSLR), Regions Financial Corp. (RF), Best Buy Co. Inc. (BBY), BHP Billiton Ltd. (BHP), Altera Corp. (ALTR), Honeywell International Inc. (HON), Itau Unibanco Holding S.A. (ITUB), International Rectifier Corp. (IRF), Excel Maritime Carriers Ltd. (EXM), Helix Energy Solutions Group (HLX), Wynn Resorts Ltd. (WYNN), Apollo Group Inc. (APOL), Fedex Corp. (FDX), Discover Financial Services (DFS), Prologis (PLD), ebay Inc. (EBAY).

-posted by Joseph Hargett (jhargett@sir-inc.com)
9/3/2010 10:18 AM

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Hot Stocks: TrueBlue Inc. and Blyth Inc.

9/3/2010 11:06 AM

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Keywords:

TBI

BTH

DJIA

The Dow Jones Industrial Average (DJIA) rocketed higher out of the gate this morning, as Wall Street cheered a stronger-than-expected August nonfarm payrolls report. The DJIA challenged resistance in the 10,450 region early in the session, but has since moderated its gain to about 70 points. Checking in with activity on the New York Stock Exchange (NYSE), we find that 2,056 stocks are advancing, while 729 are declining. Leading the bullish contingent is TrueBlue Inc. (TBI), with an advance of nearly 8%, while Blyth Inc. (BTH) has dropped more than 7% to lead the minority lower.

Global staffing companies are seeing a direct benefit from this morning's nonfarm payrolls report, which included a 17,000 gain in temporary employment. TrueBlue Inc. (TBI) is leading the sector higher, though the shares have stalled in the $12.60-$12.80 region. This area provided a floor for the stock in July and early August, and has apparently switched roles to become resistance. The stock's 20-week moving average is also perched in the region, and could provide an additional technical hurdle.

Sentiment on TBI is mixed. Options traders are bearishly aligned, as the stock's Schaeffer's put/call open interest ratio (SOIR) of 0.33 ranks above 78% of all those taken in the past year. Meanwhile, five of the seven analysts following TBI rate it a "buy" or better. So far, the bears have been right, as the equity is down more than 21% since the start of 2010.

Yesterday, shares of Blyth Inc. (BTH) soared nearly 10% after the company lifted its 2011 earnings outlook to a profit of $3.05 to $3.35 per share. Today, the stock has plunged more than 7% after analysts at CL King downgraded the security to "neutral" from "strong buy." Clearly, the past 48 hours have been quite interesting for BTH investors, with the shares now trading back below short-term resistance in the $41-$42 region after being poised to fill in their early June bear-gap lower on Thursday.

On the sentiment front, BTH is not optionable, but that hasn't slowed down short sellers at all. More than 8% of the stock's float is currently sold short, after a plunge of 21% in short interest during the prior month. Lacking call options to hedge their bets, short sellers may have no choice to continue buying back BTH shares, especially if the stock recovers from this morning's downgrade.

-posted by Joseph Hargett (jhargett@sir-inc.com)
9/3/2010 11:06 AM

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Retailers Attracting Notable Option Activity: Kohl's Corporation and Abercrombie & Fitch Co.

9/3/2010 12:48 PM

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Keywords:

KSS

ANF

The retail sector received a boost on Thursday, as many companies reported consensus-beating August same-store sales.

Kohl's Corporation (KSS) followed the trend, revealing that its August same-store sales rose 4.5%, ahead of analysts' forecast of 2.6%. The stock responded favorably to this news, jumping roughly one point higher on Thursday to extend this week's rally. Now the retailer is docked well above its 10-day and 20-day moving averages, and is currently challenging the $50 level. KSS has not closed a session above $50 since June 23.

Option players were feeling bullish toward KSS on Thursday, with 14,000 calls changing hands. Over 4,600 contracts traded on the September 50 call -- the bulk of which traded at the ask price. Open interest at this strike increased by 2,762 contracts overnight, indicating that fresh bullish positions were added here. In other words, it seems that some traders are counting on KSS to soar past round-number resistance in the coming weeks.

Meanwhile, teen retailer Abercrombie & Fitch Co. (ANF) reported on Thursday that its same-store sales increased 6% in August -- narrowly beating the consensus estimate of 5.9%. Total sales for the month arrived at $353.7 million -- a 14% increase from the year-ago period.

These lackluster results had little effect on the stock, which has been hovering in the $35 to $37 neighborhood for the past few weeks. ANF is currently docked at $35.58, threatening to close the week above its 10-week trendline, which is located just below the $36 level.

Nearly 10,000 contracts traded on ANF's September 37 call on Thursday, with the bulk of these calls changing hands at the bid price, revealing they were likely sold. Open interest fell by some 2,600 contracts overnight, pointing to liquidation activity at this strike. In other words, it seems that some bulls are abandoning ship on ANF, by selling to close their out-of-the-money calls.

Despite Thursday's liquidation activity, the September 37 strike still houses peak call open interest of over 8,500 contracts. Should yesterday's trend continue, though, this configuration could soon change.

-posted by Sarah Wasserman (swasserman@sir-inc.com)
9/3/2010 12:48 PM

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