RACK - never ever listen to analysts...

Discussion in 'Stocks' started by diligent, Mar 22, 2007.

  1. look at todays price action. why would anyone ever listen to analysts?

    were these people buying options (article below) all retail customers and not locals?

    i can only assume so... and they got slaughtered.


    STOCKS NEWS US-Heavy Rackable call trades sets up case for bears
    4:36p ET March 7, 2007 (Reuters)

    Stocks on the move [HOT-RTRS] Real-time Equity news [U E] [RESF/US]

    U.S. stock market report [.N] 1633 ET 07Mar2007-Heavy call trades in Rackable sets up case for bears ------------------------------------------------------------------------------

    A stock showing heavy call trading is Rackable Systems Inc. , a bearish factor for the computer maker from a contrarian view. Its shares ended up 13 cents at $16.50. The stock dropped from $56 a year ago to a recent low of $15.96, but this fall did not bring out heavy put trading, said R.F. Lafferty options strategist Jay Shartsis.

    It does trade options in good quantities, so this is no statistical aberration. Its 21-day volume-based put/call ratio is near 50 puts traded for every 100 calls, similar to a year ago when shares were much higher. The very low relative strength combined with no put move and no share rally flag it as a short candidate, Shartsis said.

    Reuters Messaging rm://doris.frankel.reuters.com@reuters.net 1613 ET 07Mar2007 RTRS-US STOCKS-Wall St falls on growth, housing concerns ------------------------------------------------------------------------------

    U.S. stocks fell on Wednesday, with investors uncertain that equities could avert further losses amid lingering concerns about economic growth and fallout from a slowing housing market.

    For more, please double-click [.N]

    Reuters Messaging: rm://ellis.mnyandu.reuters.com@reuters.net 1548 ET 07Mar2007-S&P futures needs to hold 1,397.50 for sustainable gains ----------------------------------------------------------------------------

    After making some significant new highs, traders are once again taking some profits in stock index futures as the market heads into the close. If the S&P futures can hold close to the 1397.20 area, it should be able to mount a late rally, said Harry Michas, stock index futures trader at manmarketmonitor.com.

    But he noted if that level is breached and at the same time, the Nasdaq 100 futures start to trade below the 1,741 area and the Russell starts to move beneath the 778 level, it should be the beginning of a late sell-off to the 1,395 level in the S&P futures and perhaps beyond.

    Reuters Messaging rm://doris.frankel.reuters.com@reuters.net 1539 ET 07 Mar2007-Stocks seen needing time to mend after sell-off ------------------------------------------------------------------------------

    After this past week's sell-off, investors may see abrupt swings to the upside as a sign of the stock market's resiliency, but such moves could hinder the stock market's attempt to mount a meaningful recovery if stocks didn't take time to form a base.

    "I'd like to see the market stay near the lows and do some work, go sideways," said Louise Yamada, market technician at Louise Yamada Technical Research Advisors in New York.

    "We'd like to see the market more or less stay subdued until the buying starts coming in again rather than see it run up and have people selling into the rally."

    Reuters Messaging: rm://ellis.mnyandu.reuters.com@reuters.net 1432 ET 07Mar2007-US STOCKS-Blue chips gain with energy shares -------------------------------------------------------------------------------

    U.S. blue-chip stocks gained on Wednesday as rising crude oil prices lifted energy shares, including Exxon Mobil Corp., but lingering economic worries kept investors cautious.

    For more please double click [ID:nN07260845]

    Reuters Messaging: rm://caroline.valetkevitch.reuters.com@reuters.net 1428 ET 07Mar2007-Fed's Moskow says markets operating well after last week -------------------------------------------------------------------------------

    Financial markets seemed to have weathered last week's unwinding of carry trades that saw sharp gains in the yen and steep losses in U.S. stocks, Chicago Federal Reserve Bank President Michael Moskow said on Wednesday.

    For more please double click [ID:nNAT002499]

    Reuters Messaging: rm://caroline.valetkevitch.reuters.com@reuters.net 1423 ET 07Mar2007-Office Depot calls fly after upgrade -------------------------------------------------------------------------------

    Traders are furiously snapping up upside calls in Office Depot after Deutsche Bank upgraded the office-supplies retailer to a buy from a hold. Its shares rose 70 cents to $34.35 in afternoon trade. Since the stock opened at $34.36, "call buying has been building and building, as has the option volatility," said Pete Najarian, co-founder of optionmonster.com. He noted the aggressively purchased calls were the July 35 series for $2.30 a contract, as more than 8000 traded vs previous open interest of 409 contracts in afternoon trade. "The buying of calls to puts reached 20-to-1" he said.

    Reuters Messaging: rm://doris.frankel.reuters.com@reuters.net 1417 ET 07Mar2007-Fed's Moskow says more rate hikes could still be needed -------------------------------------------------------------------------------

    Chicago Federal Reserve President Michael Moskow on Wednesday did not rule out another interest rate increase to tamp down inflation, even after a recent run of soft economic data.

    For more please double click [ID:nN07239238]

    Reuters Messaging: rm://caroline.valetkevitch.reuters.com@reuters.net 1403 ET 07Mar2007-Fed book says several districts see slower growth ------------------------------------------------------------------------------

    Several U.S. regions noted slower economic growth in the last weeks of February but price pressures remained little changed despite tight labor markets, the Federal Reserve said on Wednesday.

    For more please double click [ID:nWBT006652]

    Reuters Messaging: rm://ellis.mnyandu.reuters.com@reuters.net 1327 ET 07Mar2007 - Silver lining seen to yen carry trade unwinding ---------------------------------------------------------------------------

    "The silver lining is this: In that Japan has been the weak link in the U.S. global earnings picture over the past year, a stronger yen/weaker dollar could be just the remedy to slumping U.S. affiliate earnings in Japan," said Joseph Quinlan, Chief Market Strategist of Global Wealth & Investment Management at Bank of America in New York.

    "The weaker the dollar is against the yen, the stronger the dollar-based earnings of U.S. affiliates operating in Japan, among the most important markets in Asia for U.S. multinationals."

    Reuters Messaging: rm://ellis.mnyandu.reuters.com@reuters.net
  2. I don't get RACK. Do they even make their own servers?

    I thought about taking a gamble on making a few $$$ when their stock hit $16, and now it popped a little, but after researching their business model, it's not as if Dell, HP, IBM can't squash them in one fell swoop.

    They're hallmark is efficient storage and heat dissipation? Is that their shtick?
  3. i dont really get it either. but what makes me think about it is these options....

    who bought those options? locals or retail?

    is it possible the locals got hosed here? i can barely believe that but it seems to be the case...

    makes me think option volume is useless to me.

    does anyone out there have success employing option volumes?
  4. I'm not sure what the empirical data shows, but I believe whenever there has been massive accumulation of call options on a given security recently, it was a green flag that there was about to be a buyout or takeover.

    I'm not sure large accumulation of puts signaled anything meaningful.

    It would be a privilege to see the empirical data on the track record of what put/call option buying does successfully signal.
  5. excellent comments - thanks.
  6. Diligent, that was just an observation of mine in the most general sense.

    I have no idea if it's true or not, and I don't know who, if anyone has compiled any data to show call/put option accumulation as indicative of anything.

    I thought I did recall hearing or seeing something about massive call option contract accumulation as indicative of M&A activity. But it was on the order of 35x to 80x average volume, or something ridiculous, like that. I think Harrah's was one example.
  7. You guys have to re-watch that Cramer video on Youtube.com.

    So the first step is to buy the options cheap. The next step is to call at least 6 trading desks and say that Sun Microsystems is going to buy RACK. Next step is the stock shooting up. Then we sell the call options. Done deal.
  8. understood, still, good to hear another's thoughts on this.
  9. that certainly seems plausible.