Another round of “mourning” headline anxieties tied to Greece is shaken off once again in Tuesday’s first half. As of 11:10 ET the SP-500 (SPY) is up narrowly by 0.05% as a confident but less complacent bull continues to put its best foot forward.
With the clock still ticking on Greece’s mountain of debt and officials still failing to establish fresh austerity measures with authorities; investors felt anxiously compelled for a second straight session to take profits out-the-gate Tuesday.
Fast forward less than a couple dozen intraday candlesticks and in a repeat of Monday’s storyline, a defiant EUR/USD, currently up a strong 1.20%, continues to suggest either default or a more pleasant sounding last minute resolution is being priced into the broader market at this juncture.
In those other intertwined markets of influence, the US Oil Fund (USO) is up 1.25% and trading out of three-day breakout pattern off 200SMA support within a five-week long pullback.
Raised geopolitical supply concerns out of Iran, a likely optimistic eye on the euro, as well as a hold of 200SMA technicals support, have finally allowed the price spigot in the US Oil Fund to tighten and play a bit of catch up with Brent crude whose spread over WTO had widened to its largest since October.
The CBOE Volatility Index ($VIX) is off fractionally near 17.50% and just below its 10SMA. Following Friday’s concerning, “stretchy” 13% differential relative to its short-term, mean-reverting average and hit of fresh lows near 16%; the price action is mostly neutralized and more supportive to market bulls than prior.
On the corporate confessional side, a diverse group of market heavyweights has produced lopsided favor in support of “better-than-feared”, “buy-the-news” or “fill-in-the-blank” reasons for pushing shares on an upward trajectory.
In the mix and assisting the broader market hold its own are shares of ArcelorMittal (MT), Toyota (TM), Coca-Cola (KO) and YUM! Brands (YUM) with gains ranging from about 1.25% to 2.75%.
In the technical spotlight, shares of oil and gas producer Anadarko Petroleum (APC) are up 3.50% and attempting to break out from a 10-month long inverse, continuation H & S weekly pattern to fresh all-time-highs.
By the numbers, Anadarko beat profit views by $0.10 in earning $0.72 per share and easily bested revenue estimates of $3.29B with actual sales of $3.84% and year-over-year growth of 42.7%. On call, management noted it delivered record sales volumes, effective capital allocation and capital expenditures were at the low end of guidance.
For growth traders in search of the next market heavyweight, shares of Solarwinds (SWI), an IT management software outfit and current IBD “Leaderboard” constituent, are up 9.0% after announcing a four cent profit beat of $0.29 per share, topping sales forecasts with growth of 34% and raising its first quarter revenue outlook above Street views.
Checking the option action in Solarwind, 6,800 contracts have changed hands compared to average volume of 1,500. Of that, roughly more than 80% has been traded in the February and March surrounding money 35 and 37.5 strike calls and an overall and lowly put/call reading of just 0.03.
A recent strategy discussion of Solarwind over at Investors.com from Friday offered up the use of puts in conjunction with legged stock in front of the earnings event in a piece titled “A Friend with Benefits.” With shares of SWI currently about $1.30 above the $35 area where we detailed the legged married put as a way to all but eliminate a bull’s downside risk; a sacrifice of about $0.75 has occurred with the put trading for $0.55 per contract.
Net, net a standalone profit of about $2.40 in long stock has bested the adjusted position with its overall gain of $1.65. Where’s the benefit in that? With the ability to have stayed the course more confidently through yesterday’s bearish, heavy volume round turn back below the prescribed buy point of 33.78; I’d estimate it’s at least $1.65 in profits for more than a few bulls.
Chris Tyler
Senior Options Writer, former Market Maker & fulltime Option Hedge Hog Advocate
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The information offered here is based upon Christopher Tyler’s observations and strictly intended for educational purposes only, the use of which is the responsibility of the individual.
