Further Herculean efforts to move past the Achilles Heel that is Greece proves too much to shoulder for bulls in Wednesday’s first half. As of 11:15 ET the SP-500 (SPY) is under modest pressure of 0.20% as a slightly less confident bull pulls back from equally narrow out-the-gate gains.
A third time hasn’t proved to be the charm for bulls still waiting on a resolution or some type of closure regarding Greece and its ticking mountain of debt. Following back-to-back sessions in which bulls picked up their technical bootstraps to rally from out-the-gate bouts of profit-taking, a move to open optimistically higher Wednesday and score marginally fresh intermediate highs, has been met with profit-taking.
In those intertwined markets of influence, a strong follow-through breakout for the EUR/USD on Tuesday has encountered modest profit-taking of 0.10% to test prior resistance of 1.323 established over the past two weeks.
After trading up nearly 1.50% the US Oil Fund (USO) and piercing its 50SMA from below, shares are off 0.25%. Profit-taking on the heels of yesterday’s 1.66% gain comes despite weekly inventories data showing a lighter-than-expected build of 300K barrels compared to forecasts of 2.5M, continued Iranian supply concerns and a bit more optimism regarding Greece by jolly bulls trading Brent crude; which remains marginally higher on the session.
The CBOE Volatility Index ($VIX) is up 3.50% to 18.25%. The action has the sentiment gauge squarely against its 10SMA in a neutralized short-term position with nominal prices lending support, historically speaking, to bulls.
On the corporate confessional side, a lot of ink has been plied to paper to describe more of the same, very varied and ever-less influential earnings reports. In the heavyweight spotlight and putting on a bit of a show for bulls, entertainment and leisure goliath Disney (DIS) is trading up 0.65% to fresh intermediate highs despite missing sales forecasts good for eking out year-over-year growth of just 0.6%.
Enjoying the most exaggerated gains of the day, shares of Computer Sciences (CSC) are up 17.25% in volatile two-way trade engulfing the 200SMA. The IT services outfit crushed earnings estimates by $0.77 in earning $1.35 per share but saw sales fall by a weaker-than-forecast 5.8%.
And looking ever-fashionable and being consumed voraciously by bulls, shares of high-end apparel label Ralph Lauren (RL) and wings-and-things eatery Buffalo Wings (BWLD) are up 9.25% and 13.50% and hitting fresh all-time-highs on the heels of pleasant enough, all-around earnings beats.
For the bears, a penny beat, modest sales miss of 15.8% growth, lackluster and mixed guidance and a well-baked stock price has amounted to profit-taking of 5.75% for Panera Bread (PNRA). And shares of commercial real estate operator CBRE Group (CBG) are off 6.0% and breaking both 200SMA and up-channel support after its revenue miss and guiding FY12 earnings below Street views.
Finally and in those sometimes accurate heat-seeking option markets, Cisco (CSCO) is seeing heavy volume in front of tonight’s earnings report. A bit more than 130,000 contracts have changed hands compared to its average tally of 65,000 with calls leading by a two-to-one margin.
The Weeklys ATM February 20 straddle is priced for $1.09. Implieds of 90% suggest more theoretical types expect a 68% or 1SD chance shares to remain within a devilish range of 6.66% through expiration, while long straddle buyers will be hoping for a move beyond nominal breakevens of 18.91 and 21.09.
Most active on the session but far from making a strong impression are the regular February 21 calls. Volume of 13,500 compares to a much larger open interest statistic of 142,000, which means the opening or closing of positions can’t be determined with any authority. Furthermore and priced for $0.28 and roughly 4.5% out-of-the money; it is what it is and that’s not saying or doing much to get this option strategist interested one way or the other.
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.
