Double-Witching Puts a Positive Spell on the Markets

Publish date:

Gotta love the witches.

So said Wall Street's big-cap longs this afternoon, in the face of muttered imprecations from shorts caught in an options-expiration rally. As

found in today's

Options Buzz, the double-witching expiration of stock and stock-index options had a positive bias that overcame downward forces like the reported bankruptcy of Japan's fourth-largest brokerage.


Dow Jones Industrial Average

, up more than 52 to 7879 around 1 p.m. EST, stumbled as low as 7791.55 by 2:30 as the

Nihon Keizai Shimbun's

Yamaichi Securities

report suffused through trading floors. But the blue-chip index turned on one of the dimes Yamaichi doesn't have many of, shooting up for a gain of 54.46 to 7881.07.

Was there real conviction behind the move? "Not at all," said Bob Basel, director of listed trading at

Smith Barney

. "It was options-expiration related." Basel said the move tells him absolutely nothing about real underlying sentiment going into next week.

The broad

S&P 500

rose 4.11 to 963.09, but high-tech and small-cap equities again failed to join in the reindeer games. The tech-rific

Nasdaq Composite Index

fell 5.81 to 1620.75, with the

Philadelphia Stock Exchange Semiconductor Index

down 3.61 to 307.95 and the

Morgan Stanley High-Tech 35

down 4.27 to 459.66. The small-cap

Russell 2000

dropped 0.65 to 435.05.

Still, all of the major indices enjoyed an up week. The Dow rose 308.59, or 4.1%; the S&P 500 rose 34.74, or 3.7%; the Nasdaq rose 37.24, or 2.4%; and the Russell 2000 rose 6.64, or 1.5%.

Tony Dwyer, chief market strategist at

Ladenburg Thalmann

, said he was pleased to see the Dow poised for an assault on 7900 and beyond. "I was more focused on 7700

than 7800, and it seemed to get through there pretty easily," he said. "I think all the ducks have lined up for a good market. I think the bottom is in place. The Southeast Asian situation and the currency situation in Brazil, they're definitely negatives. But I think a thing that's lost in the shuffle is the strength in the Mexican economy and the Canadian economy, as well as our own. Those economies are far more important than all other economies."

Market internals were mixed as the week drew to a close. On the

New York Stock Exchange

, 1,582 advancers led 1,270 decliners on 611 million shares. New NYSE highs beat new lows by 165 to 31. Nasdaq decliners topped advancers by 2,347 to 2,006 on 688.6 million shares. New Nasdaq highs outpaced new lows by 125 to 85.

Friday's market action

(earnings estimates from

First Call


Real Networks

(RNWK:Nasdaq) debuted with a leap of 5 3/8, or 43%, to 17 7/8, leading a day chock full o' IPOs. (Real Networks, brought public by

Goldman Sachs

, was the subject of a

Tuesday story in

.) Other upside standouts on the calendar included

Merrill Lynch



(TGNT:Nasdaq), up 4, or 18.6%, to 25 5/8; Merrill issue


(ROV:NYSE), up 2 1/2, or 17.9%, to 16 1/2; Goldman issue

Affiliated Managers Group

(AMG:NYSE), up 3, or 12.8%, to 26 1/2;

Morgan Stanley Dean Witter


AMB Property

(AMB:NYSE), up 2, or 9.5%, to 23; and

Rauscher Pierce Refsnes


OYO Geospace

(OYOG:Nasdaq), up 1 1/4, or 8.9%, to 15 1/4. Smith Barney issue

American Physician Partners

(APPM:Nasdaq) was the largest disappointment among the session's IPOs, sliding 7/8, or 7.3%, to 11 1/8.

BDM International


surged 7 1/8, or 31.8%, to a 52-week high of 29 1/2 after



agreed to acquire the company for $29.50 per share, or $1 billion. TRW moved up 1/4 to 58 7/16.



bounded 1 5/16, or 26.6%, to 6 9/32 after saying it expects to file next year a new-drug application for TLC D-99, a treatment for metastatic breast cancer.



surrendered 3 3/16, or 26%, to 9 1/8 after saying late yesterday that European regulators asked it to withdraw the marketing application for its RIGScan CR49 monoclonal antibody. The regulators said they need more information on the product, which is meant to help detect hidden tumors.

Micron Electronics


plummeted 2 5/16, or 16.7%, to a 52-week low of 11 9/16 after warning that its first-quarter net income would be "minimal," citing high inventories and price pressures. The 13-analyst estimate called for a profit of 22 cents per share versus the year-earlier 27 cents. Most other computer makers tumbled as well, with

Gateway 2000


down 1 7/16 to 29,



down 2 13/16 to 63 11/16 and


(DELL) - Get Report

down 2 3/8 to 83 3/8.


(IBM) - Get Report

advanced 13/16 to 105 9/16 on word that Chairman and CEO Louis Gerstner agreed to stay with Grand Bleu for five more years.



gained 3/4 to 63 5/8 after authorizing a buyback of up to $1 billion worth of stock in addition to the already-approved $500 million.

Hambrecht & Quist


soared 4 1/2, or 12.9%, to 39 3/8 on continuing takeover speculation. Also rising among second-tier brokerages were



, up 1 13/16 to 25 1/8, and

Piper Jaffray

(PJC) - Get Report

, up 1 5/8 to 27 7/8.

Intermedia Communications


bounced 5 1/8, or 12.4%, to 46 3/4 after agreeing to buy

Shared Technologies Fairchild


for $640 million. Shared Technologies rose 5/8 to an all-time high of 14 5/8 and


, which holds 44% of Shared, slid 1 to 24 1/16. Intermedia beat out rival

Tel-Save Holdings


, but Tel-Save gained 1 3/8 to 23 1/2 after receiving $237 million from Intermedia to end its $511 million merger pact with Shared. The Tel-Save windfall leaves it in better shape to pursue its unsolicited bid for



, which rose 3 3/8, or 8.1%, to 45. Got all that?



skidded 2 5/8, or 10.6%, to 22 1/2 after an appellate court ruled against it in an element of its patent infringement dispute with

Cadence Design Systems


. Cadence lost 7/8 to 26 1/16.



plunged 2 1/2, or 12.8%, to 16 3/4 after late

yesterday announcing a restructuring plan and a fourth-quarter charge.

Bear Stearns

downgraded the stock to sell from neutral.

Applied Materials

(AMAT) - Get Report

sloughed off 1 3/16 to 36 3/8 despite late

yesterday reporting fourth-quarter operating earnings 3 cents per share better than expected and despite guiding first-quarter estimates up by 3 cents. Elsewhere in semiconductor equipment,



lost 3 to 43,


(KLAC) - Get Report

lost 2 13/16 to 44 11/16,

Kulicke & Soffa

(KLIC) - Get Report

lost 1 7/8 to 29 3/4 and


(TER) - Get Report

lost 1 5/8 to 37.

Nabisco Holdings


advanced 3 7/8, or 9%, to an all-time high of 46 7/8 after Goldman Sachs upped it to the recommended list from market perform. The company late yesterday said Chairman John Greeniaus planned to retire for health reasons as of Jan. 1.

South Korean ADRs jumped higher in reaction to the Korean government's plan to seek

International Monetary Fund

assistance with its financial disaster.

SK Telecom

(SKM) - Get Report

improved 1 3/16 to an all-time high of 36 3/4 on reports saying


(MT) - Get Report

is readying a $37-per-share ($1.3 billion) bid for the company. Meditrust edged up 1/4 to a post-offering high of 38 3/8.



rose 1 1/2 to a four-year high of 28 7/8 after

Laidlaw Environmental Services



yesterday upped its bid for the company to $30 per share. Laidlaw's move countered a $28-per-share bid for Safety-Kleen from

Philip Services


. Laidlaw gave up 1/8 to 4 5/8 and Philip slid 5/16 to 16.

Cabletron Systems

(CS) - Get Report

dropped 1 1/2 to 26 and

Digital Equipment


ran up 1 11/16 to 50 11/16 as talks reportedly continued on the potential $500 million sale of DEC's network hardware business to Cabletron.

looked into the deal in a

story today.



ascended 2 9/16 to an all-time high of 63 7/16 on news that its researchers have found a way to place a cancer-inhibiting gene into cancerous cells that lacked it.

Players International

(PLAY) - Get Report

hopped 3/8, or 12%, to 3 9/16 on an upgrade to buy from hold at

Credit Suisse First Boston


Tower Automotive


climbed 2 1/16 to 38 7/8 after Bear Stearns and


both upgraded it to buy from attractive.

Abercrombie & Fitch

(ANF) - Get Report

declined 1 13/16 to 32 7/16 after Merrill Lynch lowered it to near-term accumulate from buy, maintaining a long-term buy.