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CLOSING WRAP-UP, June 28
By Jody Osborne, Optionetics.com
6/28/2005 4:30 PM EST

http://optionetics.com/articles/article_full.asp?idNo=12722

Bearish trading ends Tuesday with the major market indices seeing sharp gains. The Dow ($INDU) added 106.11 points on the session to close at 10,396.89. The S&P 500 ($SPX) tacked on 10.96 points to 2,069.96. The Nasdaq ($COMPQ) gained 24.76 points, or 1.21 percent, to 2,069.89. Market breadth was positive 23-to-9 and 22-to-8 on the Big Board and Naz respectively. However, volume was light with the NYSE trading 1.32 billion shares and the Naz turning over 1.61 billion shares.

One of the keys to Tuesday’s success came from a drop in oil prices. The August futures contract fell $2.34 to $58.20 after closing for the first time above $60 on Monday. On Wednesday, the EIA will release its weekly inventory report. Expectations are for a further decline in crude levels, but a rise in distillates. Of interest is the fact that consumer sentiment continues to rise despite record high oil prices.

The Conference Board announced that consumer confidence rose to a three year high in June. The index surpassed expectations and economists were pleased to see that those seeing jobs as plentiful matched those seeing jobs as hard to find. On Friday, we’ll get more information on consumer sentiment from the University of Michigan report.

Shares of Oracle (ORCL) tacked on 2.31 percent Tuesday ahead of the company’s earnings release Wednesday morning. The software company will report its first results with the full impact of its PeopleSoft addition. Traders will be interested in seeing how corporate America sees the future given high energy prices.

In tech news, shares of both Advanced Micro Devices (AMD) and Intel (INTC) rose Tuesday after AMD filed a suit against INTC. The suit suggests that Intel uses improper coercion to get computer makers to use their microprocessors. This is a similar suit to the one that Microsoft (MSFT) was hit with back in the late 1990s. It will be interesting to see how this plays out, but so far, the news has had little impact on Intel shares.

As we enter the pre-announcement period, traders remain focused on interest rates and oil prices. On Thursday, the FOMC will release its latest statement and expectations are for the Fed to raise rates another 25-basis points. The Fed statement will garner a lot of attention, with traders looking at how they see the economy and higher energy prices and how this will impact future rate hikes.

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