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TODAY’S NOTABLE MARKET ACTION

  • Action was heavy in the dollar index again.  The trades are more evidence of the utter confusion in the market these days:

UUP – PowerShares DB US Dollar Bullish Fund – – Once again options action in the dollar index fund catches our eye. The dollar index itself is down 0.3% at 75.45, while this ETF, which allegedly tracks its performance, is down 1.9% at $22.36. No one ever told me this was a leveraged fund, but its own volatility lives in a world of its own. However, the soon-to-expire November options that saw swollen open interest the size of a small African nation last week, are heavily offered this morning and are being sold actively at just five cents. So far it looks like longs are ditching about 23,000 lots of a massive 261,000 established positions for fear that shares in the fund don’t stage a rally that would lift them above $23 by this time next week. Given the recent shenanigans, that may or may not require a rise in the value of the dollar index. It also appears that the pessimism spread to the same strike in the December contract where the action appears to have been inspired by sellers. Some 40,000 calls have changed hands, while open interest is 250,000 lots.

  • Shares of PALM traded higher today on takeout rumors:

PALM – Palm Inc. – – Trader talk – and we have no confirmation – is doing the rounds that Finnish handset-maker Nokia may bid for Treo-maker, Palm. Its shares are up 5.3% and the call options brigade is busy trying to set the world alight with bullish plays. The November 12.5 strike calls, already home to 13,354 bullish positions, saw 12,250 further bullish bets placed as the shares neared the striking price at $12.05. Premiums at the strike more than doubled and have traded between 24 and 52 cents so far in the hopes that a bid will be emerge imminently and that it would see Palm valued at more than $13.00. The 52-week high at $18.09 was established in late September. Today’s underlying volume looks uninspiring at 8.5 million. Uncertainty as measured by the reading of implied volatility ticked up only slightly on the rumor to 89%.

  • Goldman lifted their price target on DOW to $37 and reiterated their conviction buy list rating.
  • Wells Fargo upgraded shares of QCOM to outperform.
  • JP Morgan downgraded Repsol (REP) to a sell.
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