Schaeffer's Daily Market Blog Features Goldman Sachs, KB Home, iShares Russell 2000 Index Fund, Circuit City Stores, and Exxon Mobil

Business Wire, June 17, 2005

CINCINNATI -- Among the stocks featured in the June 17 edition of Schaeffer's Market Blog are Goldman Sachs (NYSE:GS), KB Home (NYSE:KBH), iShares Russell 2000 Index Fund (AMEX:IWM), Circuit City Stores (NYSE:CC), and Exxon Mobil (NYSE:XOM). Schaeffer's Market Blog is just one of the many free market commentaries written everyday at www.SchaeffersResearch.com - the home of Bernie Schaeffer and Schaeffer's Investment Research. The Market Blog is written throughout every trading day by Schaeffer's financial analysts and traders. They are quick insights to the day's most notable market activity from an options perspective. For additional information about this report or to have it delivered to you free via email every day click on the following link. http://www.schaeffersresearch.com/redirect.aspx?CODE=PROB1M&PAGE=1 .

Schaeffer's Market Blog for Friday, June 17, 2005:

Below are just a few of today's Market Blog entries. Click here to read all of today's Market Blog. http://www.schaeffersresearch.com/redirect.aspx?CODE=PROB1C&PAGE=1 .

9:56 AM Goldman Sachs Downgraded After Disappointing Earnings and Price Surge

Investment house Goldman Sachs (NYSE:GS) reported second-quarter earnings of $1.71 yesterday morning, falling well short of the expected $1.87. Net profit fell 27 percent, net revenue fell 13 percent, and trading revenue fell 22 percent. So the stock tanked yesterday, right? Not quite. GS closed 3.4 percent higher than it did on Wednesday. It appears that not everyone was impressed. Wachovia Securities downgraded GS from "outperform" to "market perform". Sentiment is leaning towards the optimistic side with short sellers and analysts bullish and option traders somewhat bearish. The Schaeffer's put/call open interest ratio (SOIR) is at 0.88 which is higher than 83 percent of the past years readings. Short interest fell 15 percent in the latest reporting period, bringing the short interest ratio in at 2.64. Zacks showed 13 "buys" ratings, five "holds", and one "sell", prior to this downgrade. Shares of GS are down slightly this morning.

10:20 AM KB Home More Than Doubles Estimates

KB Home (NYSE:KBH) reported second-quarter earnings of $3.47 per share, crushing the estimates of $1.78. KBH also boosted its 2005 views from $7.88 to $9.00. As if this wasn't enough to get the stock moving higher, JMP Securities and Smith Barney both upgraded the stock this morning. Despite the on-going rally in housing stocks, sentiment toward KBH has been pessimistic. The Schaeffer's put/call open interest ratio (SOIR) stands at 1.58 which is higher than 89 percent of the readings for the past year. The short interest rose 11 percent last month putting the short-interest ratio at 4.88. Analysts were cautious as well with seven "buys", three "holds", and two sells". KBH is up over 9.5 percent this morning.

12:10 PM Heavy Put Selling on iShares Russell 2000 Index Fund

iShares Russell 2000 Index Fund (AMEX:IWM) has two of the most actively traded options on the Chicago Board Options Exchange (CBOE) in midday trading. Specifically, its out-of-the-money July 62 put (DIW SJ) and its slightly in-the-money July 64.50 put (DIW SY) have traded more than 21,000 and 28,000 contracts, respectively. Nearly all of these crossed on the CBOE. Most of the trades on both options executed at or near the bid price, suggesting they were sales. With open interest of 7,277 and 2,722 contracts, respectively, these appear to be the neutral-to-bullish initiation of new put sell positions. IWM is currently trading at 64.00.

1:01 PM Circuit City Misses Earnings Estimates

Unlike its big rival Best Buy (BBY), Circuit City Stores (NYSE:CC) was unable to perform some magic in the earnings confessional. On Tuesday, BBY topped earnings by 21 cents and guided earnings for Y06 higher, sending the stock skyrocketing higher. This morning, however, CC announced that its quarterly earnings came in four cents per share lighter than Wall Street's estimates. Although CC stock is down nearly four percent today, it remains above its 20-day moving average, which it has been riding higher since early May.

2:13 PM Exxon Looking Frothy

Heavy call volume on Exxon Mobil (NYSE:XOM) is making me wonder whether the stock's current rally is nearing an end. The stock is up nearly 15 percent over the past month, but option activity has been very optimistic. There are already more than twice as many call options outstanding on the equity as put options, and today's activity is only going to shift the balance further toward the call side. In addition, short interest on the shares is non-existent and analysts love the stock. I wouldn't be surprised to see a pullback at some point soon.

The above are just a few of today's Daily Market Blog entries. Click here to read all of today's Daily Market Blog. http://www.schaeffersresearch.com/redirect.aspx?CODE=PROB1C&PAGE=1 .

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