From the Technical Corner
08/25/2006 12:00 am EST
Beth Gaston Moon takes a look at for four heavily traded issues, including their share price movements and option activity. She analyzes their recent trading levels as well as the stories behind the trades…
“Advanced Micro Devices (AMD NYSE) is moving higher today after setting a goal of capturing 30% of global market share by 2009. Current market share is in the low 20s. Bear Stearns upgraded the shares to "outperform." Today's rally has taken the shares more than 6% higher. AMD has recently gained ground; last week, overtaking the 22.50 level, the site of peak call open interest in the September series. This front-month strike is currently home to almost 16,700 open positions. Ranking second in the series is the still out-of-the-money 25 strike, where more than 11,000 open calls reside. The 25 level is also significant from a technical standpoint, as AMD's descending 80-day moving average is descending into this region. So far today, the stock has failed to clear this threshold.
“Medical-equipment concern Candela (CLZR NASDAQ) reported earnings that fell far short of analysts’ expectations. In response, Cowen downgraded the shares to "neutral." Today, it is one of the biggest percentage losers on the NASDAQ, shedding more than 28% of its value. A potential bastion of support resides at the 10 level. Not only is this the psychologically significant barrier between single- and double-digit territory, but it contained significant downside in the shares throughout 2004 and 2005. What's more, 10 marks the spot of the stock's 50-month moving average, below which CLZR has not traded since January 2003.
“This morning, Toll Brothers (TOL NYSE) reduced its earnings outlook for 2006, but its 3Q results exceeded consensus estimates. Investors sent it more than 4% higher in midday trading Tuesday. TOL has been in decline mode since July 2005, surrendering nearly 60% of its value beneath the taut resistance of its 10-month moving average. This menacing trendline is perched near the 30 mark, also the site of peak front-month call support. The September 30 strike is presently home to more than 23,000 calls. The combination of trendline and options-related resistance could keep TOL from capitalizing on today's strength during the short term.
“XM Satellite Radio (XMSR NASDAQ) is broadcasting some good news after Bear Stearns boosted its rating to "outperform", citing the possibility of a turnaround in the shares. The stock is recovering by leaping more than 13% higher, and enabling the shares to edge above their critical ten-week moving average, above which XMSR has not managed a weekly close since mid-April. What's more, a single-day rally of 13% could be enough to scare away some XMSR short sellers. With more than 16% of the stock's float currently sold short, a short-covering rally could be the next step in the equity's near-term recovery.”