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CLOSING WRAP-UP, Apr. 25
By Jody Osborne, Optionetics.com
4/25/2005 3:00 PM EST

http://optionetics.com/articles/article_full.asp?idNo=12314

Bulls win the battle to start the week, though resistance still remains. The Dow ($INDU) made up for Friday’s losses Monday by adding 86.09 points to 10,243.80. The S&P 500 ($SPX) gained 9.39 points, closing at 1,161.51. The Nasdaq ($COMPQ) tacked on 14.82 points, or 0.96 percent, to 1,950.78. Volume was light on the session with the NYSE trading just 1.42 billion shares and the Naz turning over 1.48 billion shares. Market breadth was positive by a 23-to-10 and 19-to-12 margin on the Big Board and Naz respectively.

Merger news was a big part of the session Monday and this tends to have a positive bias on stocks. In the oil sector, Valero Energy (VLO) announced plans to buy Premcor (PCO) for $6.9 billion in cash and stock. This will create the largest refinery in North America, with capacity of 3.3 million barrels a day. VLO shares gained 1.11 percent on the news, with PCO shares rising 18.14 percent.

In other merger news, Qwest (Q) got the green light from MCI (MCIP) after raising its bid for the company to $9.6 billion. This was finally enough to convince MCI’s board that Qwest’s deal was superior to the one being offered by Verizon (VZ). Now Verizon has to either step up to the plate or lose out on its battle with Qwest. Despite this news Monday, none of the three stocks involved saw much movement.

In economic news, existing home sales rose in March even though expectations were for a decline. The housing sector continues to push aside the idea that it should be slowing. Of course, low mortgage rates continue to be a boon for the sector, but this is likely to change as the Fed continues its interest rate hikes. On Tuesday, traders will get more information on the housing market when new home sales data is released.

An analyst upgrade of Apple Computer (AAPL) at CSFB helped the tech sector. AAPL shares rose 4.17 percent after CSFB raised the stock to an “Outperform” and provided a $45 price projection. AAPL shares closed at $36.98 on the session. Boeing (BA) also provided strength today, rising 2.94 percent to $59.58. The aerospace company got a $6 billion bid for aircraft from Air Canada over the weekend.

Overall, the SPX was able to capture resistance near 1,160, but the Naz and Dow are still a ways from moving above resistance. However, a strong earnings season is a positive for stocks, although the economy and oil will need to provide some help as well if the bulls expect to see strong gains in the near term.


Jody Osborne
Senior Staff Writer & Options Strategist
Optionetics.com ~ Your Options Education Site