Mixed economic data and a "schnitzel-in-progress" find bulls grudgingly doing more of the same. As of 11:05 ET the S&P500 (SPY) is off 1.00% on seasonally-adjusted irritation and further confirming the latest market top or pullback to buy, depending on one's point of view.
Boeing (BA) is flying higher this morning. The aircraft manufacturer announced a surprise and welcome new schedule for its anxiously-awaited and long overdue 787 Dreamliner. The company now expects its first flight of the new passenger plane by the end of this year and stated it will be ready to start delivering the aircraft by the fourth quarter of 2010.
Investors are showing their appreciation of today's news from Boeing by vaulting shares higher by more than 9% to 52.20. The price reaction finds shares within 5% of its June highs after being grounded by disappointed bulls on prior delay concerns.
Technically, the action has BA looking considerably overbought as shares are well outside their upper Bollinger Band on the daily. That same excessive behavior has also helped venues like the Dow Industrials look smart in managing Thursday's first half profit-taking from its own daily which resembles something along the lines of a triple doji hangman pattern.
Keeping the Jones' (29 out of 30 red) in touch with the sell button and outside the friendly skies of Boeing and its subcontractors, which are enjoying sympathy moves (RTI, ATI and CRS) due to the increased visibility; a smattering of economic data has provided some incentive.
Weekly claims data continues to show any recovery in the economy is going to go hand-in-hand with high unemployment. Today's report showed new filings of 570K. The figure came in slightly above views of 565K, while the prior week's data was revised upwards by 10K to 580K.
Continuing claims declined by 119K but matched estimates with a still high reading of 6.13M and the realization the drop is being pressured by many of the country's unemployed simply running out of benefits.
A second or preliminary reading of the country's Q2 GDP was unchanged from its advance reading of -1.0%, while a bit stronger than estimates calling for a -1.5% decline. Within the report, consumer spending dropped by a lower than expected -1.0%. The decline bested forecasts by five-tenths of a percent and improved upon the prior reading of -1.2%.
On the sometimes hot-firing option front, AIG (AIG) continues to see aggressively-priced and frenetic trading of its listed calls and puts. Word on the Street this morning is the company's CEO is looking to its founder for assistance in rescuing the slightly-less beleaguered multi-line insurer.
Shares of AIG are up more than 27% this morning and "confirming", I use that sparingly, an uptrend off its March lows by taking out its early May and pre-reverse split highs of 43.80. Intraday, the most active are the "blink and its likely to change" at-the-money September 50 calls. More than 33,000 have traded with a last sale of $6.40. With shares near 48.25, the all-extrinsic premium reflects implieds of 150%.
While seemingly expensive, particularly on a near $50 stock, underlying movement of the past couple weeks has justified the pricing. In fact, the premiums across-the-board in AIG look to be mostly fair. However, that's only theoretically speaking and for those that enjoy the white room with padded walls.
Chris Tyler
Senior Staff Writer & Options Strategist
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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.
