A bull dressed up in green shoots with lesser "not-so-smart money" incentive finds an eye poke from the latest mixed and uninspiring economic data. As of 10:50 ET the S&P500 (SPY) is off 1.10% on slightly stronger bearish gestations.
Bulls dedicated to green shoots optimism and / or one last hurrah from end of quarter window dressing have been sorely disappointed by the latest and "not the worst nor the greatest" economic data.
After a slightly buoyant start courtesy of the fore-described bullish afflictions, data on consumer confidence, manufacturing and housing prices have served as a sufficient platform to "schnitzel a little" of those existing profits from.
Working our way down the bull-o-meter, manufacturing via the Chicago PMI came in above views and increased by five points from the prior period. That said, a contraction reading of 39.9 failed to inspire a bid.
Slightly less appealing, housing prices from the S&P / Case-Shiller Index beat estimates. However, in entering the bull's home made of green shoots, the presented year-over-year decline of 18.12% has not received the welcome mat.
Finally, a one-two punch from disappointing consumer confidence and expectations data were likely what pushed today's "early bulls" over the edge. The former missed views calling for a slight uptick to 55.3 with an actual drop to 49.3.
Similarly and looking forward courtesy of the expectations index, investors were beside themselves in finding a figure of 65.5 versus forecasts of 75.5, which also shed some of the prior report's more optimistic 71.5 reading.
On the corporate side, Schnitzer Steel (SCHN) is acting as additional dead weight on the commodity complex with particular emphasis on names with ties to the steel / iron (SLX) group or other industrial metals (GDX).
Shares are of SCHN are off 11.50% at 53.25 and testing the 50-Day MA after missing views by $0.21 with a surprise loss of $0.05. Revenues did manage to beat views but fell by nearly 58% from the year ago period.
Management at Schnitzer did offer a mixed outlook. On the plus side, the company's recycling and auto parts businesses are improving. And for the bears, steel manufacturing remains weak with conditions not expected to improve through the fourth quarter due to slack demand in the non-residential and infrastructure markets.
Elsewhere, "profit-taking" has taken shares of Emulex (ELX) down nearly 7% on well-above normal volume. The network storage and one-time Naz' star received notice from semi manufacturer Broadcom (BRCM) of a tender increase to $11 per share from a prior bid of $9.25.
It appears bulls caught noshing on the two-plus month long trading range in and around 11 in ELX have decided to park their capital elsewhere in collective disappointment of the new and improved bid-that's still missing that certain "je ne sais quoi."
Enjoying that certain something with hard delta bulls but less so for volatility types, are shares of Apollo (APOL). The Naz' 100 component and provider of online and campus-based learning beat Street views by $0.14 last night with profits of $1.26 per share. Revenues grew by nearly 27% as expected with much of the growth attributed to its "degreed enrollment" offerings.
Checking the board and with shares of APOL up 5.15 points to 71.15, the now ATM July 70 call is changing hands for $3.20 per contract. That might have the appearance of a decent amount of premium above and beyond its intrinsic value of $1.15. And it is too some degree, but it's certainly not enough for the overly aggressive buyers of premium leading into the report.
Priced on implieds near 42%, the July 70 call has barely managed to see the light of day despite the large jump APOL. A very much on-the-money diagnosed "vol crush" of 18 points from 60% has reduced the fun of holding that type of premium to a mere $0.20, as the contract fetched $3.00 as of Monday's close. Hmm, for those long call buyers out there, maybe some higher education into the mechanics of option pricing might be considered?
Chris Tyler
Senior Staff Writer & Options Strategist
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