Qualcomm Inc (QCOM)

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Schaeffer's Option Activity Watch Features Burlington Resources, QUALCOMM, VERITAS Software

CINCINNATI--(BUSINESS WIRE)--May 21, 2004--Today's Schaeffer's Option Activity Watch Features Burlington Resources (NYSE:BR), QUALCOMM (Nasdaq:QCOM), and VERITAS Software (Nasdaq:VRTSE). The Option Activity Watch is a report that takes a closer look at three equities appearing in our most unusual option activity report from the previous day. The Option Activity Watch is published on 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/addinfo.


Schaeffer's Option Activity Watch:

1. According to Hoover's, Burlington Resources (NYSE:BR) is among of the largest independent oil and gas companies in the U.S. and a hefty producer of natural gas. Most of the company's production comes from North America, where Burlington operates in the San Juan Basin, the Gulf of Mexico, the U.S. mid-continent region, and western Canada. The company also has operations in the East Irish Sea and North Sea and in Asia, Latin America, and North and West Africa. The security was the site of some heavy put trading yesterday, as open interest at its June 70 put popped from 246 to 3,210 contracts. Pessimism continues to soar toward this oil producer. The equity's Schaeffer's put/call open interest ratio (SOIR) jumped overnight from 1.31 to 1.54. (An increasing SOIR is an indication of rising skepticism, as puts (bearish bets) are added at a faster rate than calls (bullish bets) in the front three months of options.) What's more, this reading is higher than 92 percent of all those taken over the past year. Adding to the pessimism, the number of BR shares sold short increased by more than four percent in May to 3.5 million - the highest level since November. Wall Street is holding out on BR as well. Zacks reports that 12 of the 26 analysts following the company rate it a "hold" or worse. This leaves ample room for potential upgrades.

This pessimism seems greatly misplaced, as the security has outperformed the S&P 500 Index (SPX) since February. The equity is currently consolidating into support at its rising 10-week moving average. In fact, BR has risen on support at its 10-week and 20-week trendlines since November. With investors and Wall Street pessimistic toward the shares, it appears that there is still ample sideline cash available to help propel the security even higher.

Click the following link to see the Weekly Chart of BR since October 2003 with 10-Week and 20-Week Moving Averages: http://www.schaeffersresearch.com/wire?ID=10207 .

2. Hoover's describes QUALCOMM (Nasdaq:QCOM) as the company that pioneered the commercialization of the code-division multiple access (CDMA) technology used in wireless communications equipment and satellite ground stations mainly in North America. It licenses CDMA semiconductor technology and system software to more than 100 equipment and cell phone makers. The company also sells the popular Eudora e-mail software. The firm saw open interest at its June 65 call spike overnight by more than 2,100 contracts. Overall, investor sentiment is still leaning toward the bearish camp. The stock's SOIR of 0.80 is currently higher than 62 percent of all those taken over the past 12 months. What's more, short interest soared 14 percent higher for QCOM in April to 23.4 million shares. The major brokerage firms also have their doubts, with 17 of the 28 analysts following the firm rating it a "hold."

This pessimistic sentiment also runs contrary to the security's technical performance. QCOM has outperformed the tech-rich Nasdaq Composite (COMP) for the past year. In addition, the stock has broken above resistance at its declining 20-day moving average - a trendline the security has not closed above since April 23. It appears that the shares are springing higher off support at their 20-week moving average. The equity has not suffered a weekly close below this trendline since mid-June. A continuation of the stock's rally could force the bears to unload their positions, increasing buying pressure on the equity.

Click the following link to see the Weekly Chart of QCOM since June 2003 with 20-Week Moving Average: http://www.schaeffersresearch.com/wire?ID=10207 .

3. VERITAS Software (Nasdaq:VRTSE) develops data availability software, including applications for storage management, data protection, clustering, replication, and storage area networks. Its software guards against the loss of data after crashes and errors, speeds information recovery after failures, and tracks the location of data in global computer networks. The security has dropped under resistance at its 10-day and 20-day moving averages since late January. The shares are also battling staunch resistance at their 10-week moving average - a trendline they have managed to close above only once since the end of January. What's more, VRTSE is poised for its first monthly close below its 10-month and 20-month trendlines since February 2003.

Despite its poor technical performance, VRTSE is still seeing signs of optimism. Wall Street remains somewhat enchanted by the firm, with 18 of the 28 analysts following the company rating it a "buy" or better. In addition, the number of VRTSE shares sold short dropped by five percent in April to 11.6 million - a new multi-year low. The stock's short-interest ratio also sits at a paltry 1.38 days to cover, offering little in the way of potential support. Only options players have grown skeptical of the security. VRTSE's SOIR rest at 0.91 in the 89th percentile. The unwinding of these remaining optimistic positions could send the security even lower over the near term.

Click the following link to see the Weekly Chart of VRTSE since January 2004 with 10-Week Moving Average: http://www.schaeffersresearch.com/wire?ID=10207 .

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About Schaeffer's Investment Research (www.SchaeffersResearch.com)

Schaeffer's Investment Research, founded by Bernie Schaeffer in 1981, is 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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