What good are analysts who are consistently wrong? For instance, take Arena Pharmaceuticals (ARNA) after FDA Panel Votes Against Arena's Diet Drug Lorcaserin. How much money did their clients lose? Not all analysts work for brokerage houses, but many do, and their pay is not determined by the accuracy of their calls but the increase in sales.

How do they explain their backpedaling? One day they are pushing the stock and the next they are running for cover. Clearly they have to change their opinions based on new information, but perhaps there was too much wild speculation to begin with. More likely, they made too many false assumptions, which they love to do in a crowd so as not to be the lone incompetent.

Perhaps it's not exactly normal that one financial company comes out with two contrary predictions, but Apple Inc (NASDAQ: AAPL) is no normal company and neither is the speculation it generates. A little over a week ago, a patent application, filed by Apple back in November, was released detailing a multifunctional handheld device with a mode-sensitive circular touch pad. Whispers of the initial design for an iPhone Nano quickly began to get louder. Therefore, it wasn't exactly shocking when a note, written to clients by JP Morgan analyst Kevin Chang, was published Monday predicting a new iPhone that would be smaller, cheaper, and available sometime in the fourth quarter of this year. Chang said in his note, "We believe [the patent] is a strong sign that Apple could potentially convert every iPod nano in a nano phone." Chang concluded by predicting that release of a cheaper iPhone would generate sales of 30 to 40 million for 2008, a massive increase over Apple's own expectations of sales totaling 10 million for 2008 for the current model.

Predictably, Apple shares hit a new all-time high on Tuesday following Chang's speculation. Tuesday morning's record $134.50 eclipsed a 52-week high of $133.34 that had been the result of massive hype prior to the June 29th release of the iPhone, that had sent Apple share prices up 40% in a few months. Now, Apple has managed to yet again generate a media frenzy with the suggestive patent application. However, as fast as Chang created joyous an-iPhone-in-every-pocket images, a colleague tried to erase them. Fellow analyst Bill Shope, who has covered Apple for JP Morgan since 2003, responded to Chang's note with one of his own on Tuesday. While Shope did not disagree with the inevitable release of cheaper iPhone, Shope declared a near-term launch unlikely, stating that it would be "unusual and highly risky" and predicted that "Apple is likely to keep the iPhone and iPod as distinct business segments for as long as it makes economic sense."

So which analyst's view is gaining support? Both. There are plenty of people who feel that the end of this year is a reasonable time frame for the release of a new iPhone and still more who feel that a merging of the iPhone and iPod is imminent. Gene Munster, of Piper Jaffray, stated in a note to clients "We believe the iPhone reveals much of what the iPod will soon be." Yet, there are also those who, 13 days after the birth of the original iPhone, feel that it is too soon to begin looking for baby iPhone. And, as patent lawyer Jay Sandvos of Bromberg & Sunstein points out, not all patents indicate development: "It makes sense [for Apple] to seek patent protection for every possible aspect of such a device, whether or not Apple actually plans to use it - just to prevent competitors from doing something along these lines." It certainly wouldn't be the first time speculation regarding an Apple patent had been wrong. But who can keep from guessing at what's next? There's something about that little Apple that keeps us hungry for more.

Each bull market has its unique way of demonstrating enthusiasm for stocks. In the late 1920s, it was stock market chatter at the local barbershop that was an indication of stock market excesses. In the 1990s, The Beardstown Ladies, an Illinois-based investment club filled with seniors, graced the covers of news publications.

What about this bull market? It appears it is jock stock pickers. Lenny Dykstra, of the 1986 New York Mets World Series championship team, writes for the TheStreet.com in its News & Analysis section. What does Lenny write about? The buying and selling of options on semiconductor and related stocks. Wow! That's not too risky.

It is time to take all those MBA diplomas and throw them out the window. Forget Graham & Dodd and the Efficient Market Hypothesis, go out and sell naked puts with Lenny Dykstra.

Given the bearish sentiment in crude it's time to look both at how the crude chart looks (in this case Light Sweet Crude) and how the broader markets (the S&P 500 in this case) have performed while oil rises and falls in value.

Its clear the Crude chart is in technical trouble and has been since September when the curved uptrend line was broken. There is a probable bearish flag in progress as well, a bearish pattern (downside pole shown in red) that has a downside objective to $44 area. In addition the next major probable downside target is at $49.77 (200-week moving average) if the bearish trend continues.

U.S. stocks were mixed as 10-year interest rates rose. The Dow was up 0.02%, the NASDAQ 100 was down 0.11%, the S&P 500 was up 0.09%, and the 10 year bond rates increased to 4.690%. The CBOE VIX was up .18 to 10.82.

• Apple Computer, Inc.'s (NASDAQ: AAPL) option implied volatility was elevated at 48 on stock option investigation fear. Apple's 10Q/10K release is expected on December 29th; the documents will help clarify some of the reports surrounding Steve Jobs option grants in 2001. AMTR reiterated their Buy rating with a $99 price target on Apple, saying "no new option news". MacWorld begins January 8th in San Francisco. Steve Jobs will be giving his keynote address on the morning of 1/09/07. Apple's call option volume of 86,986 contracts compares to a put volume of 69,482 contracts. Apple's January option implied volatility of 48 is above its 26-week average of 40, according to Track Data, suggesting increasing price risks.

• International Business Machine's (NYSE: IBM) option implied volatility calm was at 18 as IBM approaches $100. IBM is recently traded at $97.06. UBSW has a $100 price target on IBM and said "IBM appears headed for solid 4Q." Siemens (NYSE: SI) and IBM set up a joint venture with the German government after the two companies signed a $9.6 billion order to upgrade the German army's computers and phones. IBM overall option implied volatility of 18 was near its 26-week average, according to Track Data, suggesting non-directional price risks.
  

• General Motors Corporation (NYSE: GM) option implied volatility was at 38 into North American International Auto Show. GM recently traded at $30.62. GM will be confirming plans for worldwide introductions of production models and innovative concept cars at the North American International Auto Show starting on January 7th. GM's overall option implied volatility of 38 was below its 26-week average of 43, according to Track Data, suggesting decreasing price fluctuations.
  

Option volume leaders today were Google Inc (NASDAQ: GOOG), General Motors Corporation (NYSE:GM), Qualcomm, Inc (NASDAQ:QCOM), and Apple Computer, Inc. (NASDAQ: AAPL).

U.S. stocks were slightly higher on light trading volume. The Dow was up 0.45%, the NASDAQ 100 up 0.35%, the S&P 500 up 0.35%, while 10-year bond rates decreased to 4.6030%. The CBOE VIX was up .02 to 11.38.

• Telik Inc's (NASDAQ: TELK) January option implied volatility collapsed after disappointing data. Telik was recently down $11.47 to $4.79. TELK Phase 3 trails related to its cancer drug Telcyta (treatment for non-small cell lung cancer & ovarian cancer) "did not achieve statistically significant improvement in overall survival." JANY & STFL downgraded Telik to sell. Telik's January option implied volatility was at 85, according to Track Data, below a level of 215 from last week, suggesting decreasing risk.
  

• Eli Lilly's (NYSE: LLY) January 55 calls were active on 6,163 contracts as Lilly rallies. Eli Lilly recently rallied .43 to $51.77, after a Court of Appeals for the Federal Circuit in Washington, D.C. ruled its 2011 Zyprexa patent was valid. Lilly faced pressure last week on documents leaked to the NY Times indicating Zryprexa (schizophrenia treatment) had understated weight gain and diabetes risk. Lilly's Zyprexa accounts for approximately 25% of Lilly's sales & 50% of its EPS. Lilly's January option implied volatility of 19 was near its 26-week average of 19, according to Track Data, suggesting non-directional risks.
  

• U.S. Bancorp's (NYSE: USB) calls active on company going ex-dividend on 12/27/06. USB goes ex-dividend on 12/27/06, paying a dividend of .40 cents. USB total intra-day call option volume was heavy on over 962,946 contracts, according to Track Data. Heavy call volume was attributable to traders hoping to take advantage of option exercises, call pricing discrepancies and low option transaction commission fees.
  

Liquid stocks with option implied volatility above 90, according to Track Data: AtheroGenics (NASDAQ: AGIX), Momenta Pharmaceuticals (NASDAQ: MNTA), Dendreon Corp (NASDAQ: DNDN), Escala Group (NASDAQ: ESCL), and Northfield Laboratories (NASDAQ: NFLD).

Option volume leaders today were Telik Inc, Altria Group (NYSE: MO), Clear Channel Communications (NYSE: CCU), and Apple Computer (NASDAQ: AAPL).

Options analysis provided by Paul Foster, options strategist for Theflyonthewall.com.