An overdue tail turner on Thursday finds modest support amongst profit-takers Friday following weaker-than-forecast GDP data. As of 11:15 ET the SP-500 (NYSEArca:SPY - News) is off 0.20% in narrow but agitated trade as bulls attempt to keep some deserved profit-taking looking constructive above more than a few additional and key technical supports than offered nine weeks and 14% ago.
Thursday’s short-term, complacently positioned VIX (.VIX) signal and a bearish tail turning “key reversal” in the SP-500 established against an extended i.e. slightly stronger-than-forecast Fib-based 8-week, 13% gainer, has picked up a modest following of interested profit-takers in Friday’s first half.
Modest and mixed-to-weak corporate confessionals and a failure of Thursday’s early rumors of progress in Greece’s debt negotiations to find legitimacy Friday, despite a stronger EUR/USD, haven’t helped matters for market bulls.
On the earnings front, disappointments of all flavors i.e. “Sell the news!” and actual “Oh, my! Sufferin’ Succotash!” has led to marquee technical scares in varied heavyweight tickers of interest like Chevron (NYSE:CVX - News), Ford (NYSE:F - News), Starbucks (:SBUX), Chubb (:CB) and Juniper (NYSE:JNPR - News).
In the spotlight and by the numbers, shares of oil and gas giant Chevron are off 3% and testing Golden Cross support after missing by a wide margin on both its top and bottom-lines. For the fourth quarter, the company earned $2.58 per share compared to estimates of $2.94 and saw revenues of $58B versus forecasts of $77.4B.
For the more overt bearish population attempting to awaken after several weeks of hibernation, shares of Riverbed (NasdaqGS:RVBD - News) are off 22%.
The network communications outfit issued a modest penny beat of $0.25 per share and a narrowly, better-than-expected revenue growth of 22.6%. But bulls looking for a comeback from the erstwhile growth company have been derailed by management's announced, below-views earnings and sales for its upcoming first quarter.
On the economic front and acting as a premarket trigger for smiles turning into frowns, Advance Q4 GDP data came in weaker than forecast. The sneak peek reading estimates the US economy climbed from the third quarter’s 1.8% to 2.8% but the increase fell short of analyst views of 3.2%. Further, Chain Deflator data rose just 0.4% compared to appraisals calling for an increase of 1.5%.
Separately, intraday consumer sentiment data for January improved marginally from December’s 74.0 to 75.0 and topped an even narrower estimated increase of 74.2 established by economists polled by our friends at Briefing.com.
Finally and in those sometimes accurate heat-seeking option markets, it appears bulls in US Air (NYSE:LCC - News) are booking trips for some additional northward passage as calls outpace puts by a five-to-one margin on abnormally heavy overall volume of 65,000 contracts.
A mix of strategies and placed wagers seem to be at work, ranging from fresh out-of-the money puddle jumping action of 8,700 January 8 calls priced currently at $0.25, possible rolling action from the March 7 to 8 call on more than 25,000 contracts and nearly 5,000 January 10 calls.
With the well out-of-the money January 10 call trading for around $0.98, the pricing dictates shares will need to rally about 57% for the contract to double in price by expiration. As shares of LCC have already risen a sunny 29% this week and into potentially, stormy lateral resistance of $8 - $9; for naked buyers of the call this might amount to as a costly piece of extra baggage and an unwanted surcharge, despite intact tailwinds from this week's earnings beat.
Chris Tyler
Senior Options Writer, former Market Maker & fulltime Option Hedge Hog Advocate
Optionetics.com ~ Your Options Education Site
Visit Chris Tyler’s Forum
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.
There are no comments yet