Schaeffer's Market Observation Features Synaptics, Weyerhaeuser, and XTO Energy

Business Wire, Oct 18, 2005

Click the following link to see a Weekly Chart of WY Since May 2004: http://www.schaeffersresearch.com/commentary/observations.aspx?click= home&ID=14406 .

Looking ahead, WY is slated to report earnings on October 21 before the market open. The paper company is expected to post a profit of 90 cents per share, down from its gain of $1.63 per share for the same period a year ago. Historically, the firm has surpassed the consensus estimate three times and missed twice during the past five quarters.

With the stock not only struggling to hold support at the 62 level, but also trading below peak front-month put open interest at the 65 strike (which could have acted as a layer of support), WY may find itself short on support should it post mediocre earnings later this week.

XTO Energy

According to Hoover's, XTO Energy (NYSE:XTO) is an oil and gas producer, with holdings in Alaska, Arkansas, Colorado, Kansas, Louisiana, New Mexico, Oklahoma, Texas, Utah, and Wyoming. The firm is also scheduled to join in the earnings fun on October 20. Analysts are predicting a profit of 77 cents per share, a 75-percent improvement over the company's earnings for the same period a year ago. Historically, the firm has met or beaten the consensus forecast in four of the past five quarters.

Heading into Thursday's report, traders jumped on the stock's October 45 call. Open interest at this front-month strike surged from 5,398 to 7,070 contracts. What's more, the stock's SOIR has dropped to 0.36, which is lower than all other readings taken during the past 52 weeks.

The various brokerage firms following XTO are also smitten. Zacks shows that 18 of the 24 analysts covering the energy firm rate it a "buy" or better, leaving ample room for potential downgrades should it post disappointing results.

Elsewhere, short sellers continue to load up on bearish bets. During the most recent reporting period, the number of XTO shares sold short inched three percent higher to 6.3 million shares. However, with a short-interest ratio of only 1.91 days to cover, it is highly unlikely the security will benefit from any short-covering support.

Looking in on the stock's technical performance, we find that XTO has been in a solid uptrend since August 2003, using the support of its 10-week and 20-week moving averages. What's more, the stock has enjoyed the support of its 10-month trendline, which it has not closed a month below since August 2002.

Click the following link to see a Weekly Chart of XTO Since July 2003 with 10-Week and 20-Week Moving Averages: http://www.schaeffersresearch.com/commentary/observations.aspx?click= home&ID=14406 .

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