In Wednesday’s first half, the adage “never sell a dull market” comes to mind as bulls put together a test of recovery highs on mostly light news. As of 11:00 ET the SP-500 (SPY) is up 0.60%, at session highs and reacquainting itself with increasingly confident investor attitude.
It’s another session of light catalysts but one filled with crafty bulls able to rotate into market laggards and enabling the major averages to move to fresh highs. Recently technically ailing internet behemoth Google (GOOG) is up 1.80% to 570 and pushing through its 50-SMA to its best levels since its less-than-well received earnings report on January 21.
A report from Bloomberg says Google’s CEO is in “active” talks with China, which appears to be a positive in the eyes of investors. In recent months has been a source of contention for bulls due to the company’s stance on human rights violations and security breaches stemming from operations in China. A separate report out this morning notes Google’s entrance into the world of online shopping. The company debuted an “apps” store for its business productivity software.
Elsewhere, the semiconductor (SMH) sector is demonstrating relative strength gains of about 2.00%, which on the daily view, is also more akin to investors digging deep than in chasing momentum; well that is, outside the indices themselves and one apparently still “sweet to taste” stock called Apple (AAPL).
As for the semis, leading the charge away from their respective 50-SMAs and still well-removed from highs set earlier this year, shares of Advanced Micro (AMD) and Micron (MU) are up 2.75% to nearly 5.00%. Both companies are presenting today at a tech conference held by broker Wedbush according to Briefing.com.
A third pocket of instrumental strength can be found in select financials (XLF) such as government-indentured AIG (AIG) and Anchor Banker Citigroup (C); both of which are leading the way technically for a second straight session. In Tuesday’s trade, shares of AIG and C were gracious enough to host breakouts for bulls from low-level bases on the anniversary of “The Bottom” with little else required other than appreciative investor optimism finding a fresh home.
In Wednesday’s session, news of a $2.0 billion trust preferred offering by Citigroup and well-regarded analyst Dick Bove jumping on board the name with positive comments for long-term ownership are carrying shares higher by about 6.00%.
Elsewhere and in those sometimes accurate heat-seeking option markets, bulls interested in a new era for financials or maybe just a shorter-term stab at a sector rotation of more than a day or two, are setting their sights on regional bank (RKH) Zions (ZION). More than 55,000 contracts have traded relative to its daily average of about 11,000.
Most active by a very wide margin are the out-of-money April 17 puts. Volume of roughly 25,000 largely matches existing open interest, so the activity could be representative of a position(s) being closed with premium now down to about $0.35 per contract.
With shares up about 4.65%, investors could be reacting to analyst commentary from a Citi Financial Services conference. Technically and for the optimistically-oriented, shares of ZION are trading hear the highs of its well-crafted weekly handle set inside an equally handsome “W” shaped base of ten months. “MOOyah!”
Finally, preppy retailer and Cramer “fav” J Crew (JCG) reported “a monster quarter” with “fantastic gross margins” thanks to strong execution by CEO Mickey Drexler and his management team. For his part, the Doctor was “spot on” with regards to the company’s report. That said however, Cramerica has to be feeling a bit like misguided Mad Money following last Friday’s call-to-arms and Tuesday evening’s delusional update.
Intraday, shares JCG are off 3.75% at 45.25 in action best described as “profit-taking” after trading up about 27% over the past month. The problem is on Friday night, Cramer specifically told his audience to go out Monday morning and buy shares of JCG on expectations of a blow out quarter and guidance.
Not a peep was mentioned of using stops as the message was purely focused on shares having only one pleasant outcome following the report. Not only did shares of JCG gap about $1.25 higher out the gate or just less than 3% to 46.87 Monday morning, but today’s 45.25 is lower than Friday’s close by a fractional amount.
Now that’s what I call misguided mad money. For those that don’t agree, Cramer’s got your back, well kind of. Tuesday night he was caught congratulating himself on his correct assessment of J Crew’s quarter while reminding folks “There’s always a bull market somewhere” but you don’t have to chase the stock. “BOOyah! Jimmy.”
Chris Tyler
Senior Staff Writer & Options Strategist
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