Schaeffer's Midday Options Update: Technical Analysis Reveals Opportunities in UPS and Other Key Stocks

Strategic Insights -

As markets await this week's interest-rate decision from the Fed, caution prevails, with major indices struggling to sustain gains. Despite merger news and a drop in oil prices, investors hold out for clarity on interest rates, with the Iranian president's letter to President Bush easing crude prices. Intel (NASDAQ:INTC) surged after an upgrade to "buy" from "hold," while Apple Computer (NASDAQ:AAPL) secured victory in a lawsuit against Apple Corps.

Key Takeaways:

  • Intel's upgrade to "buy" from "hold" by American Technology Research boosted shares nearly 3% following the company's restructuring efforts.
  • The decision in the Apple Computer (NASDAQ:AAPL) vs. Apple Corps lawsuit allowed Apple to continue using its apple logo in association with its iTunes Music Store.
  • Berkshire Hathaway (NYSE:BRK) announced a $4 billion deal to buy 80% of Israeli toolmaker, Iscar, with the Oracle of Omaha targeting investments in the U.K. and other European countries in the next year.
  • Wachovia (NYSE:WB) acquired Golden West Financial (GDW) in a $26 billion deal, bolstering its presence in the mortgage business.
  • Thermo Electron Corp. (TMO) and Fisher Scientific International (FSH) merged in a $10.6-billion deal, creating a leading provider of laboratory products and scientific equipment.
  • United Parcel Service (NYSE:UPS) saw heavy options activity on its July 85 call, testing resistance and creating a potential intermediate-term bullish play.
  • UPS's chart shows a double-top formation, with the stock dangerously close to completing the pattern and breaking through the 85 level.
  • The Schaeffer's Equity Scorecard rates UPS a 6.0 out of 10, citing strong technical performance but negative sentiment.
  • Analysts' "hold" ratings and skepticism among the speculative options crowd present opportunities for upside pressure.

Statistics:

  • Intel (NASDAQ:INTC) shares rose nearly 3% following the upgrade to "buy" from "hold" by American Technology Research.
  • Apple Computer (NASDAQ:AAPL) secured victory in a lawsuit against Apple Corps, allowing it to continue using its apple logo in association with its iTunes Music Store.
  • Berkshire Hathaway (NYSE:BRK) will pay $4 billion for 80% of Israeli toolmaker, Iscar, expanding its presence in the U.K. and other European countries.
  • Wachovia (NYSE:WB) acquired Golden West Financial (GDW) in a $26 billion deal, enhancing its mortgage business.
  • Thermo Electron Corp. (TMO) and Fisher Scientific International (FSH) merged in a $10.6-billion deal, forming a leading laboratory products and scientific equipment provider.
  • United Parcel Service (NYSE:UPS) saw 2,298,061 calls change hands, compared to 1,752,120 puts, with a single-day put/call volume ratio of 0.76.

Sources:

  • Schaeffer's Midday Options Update
  • American Technology Research
  • The Wall Street Journal
  • Zacks
  • Schaeffer's Equity Scorecard