All is quiet on the daily chart, but beneath the surface it's been a humper of a Wednesday for bulls and bears on increased volatility. As of 10:55 ET the S&P500 (SPY) is showing a rather tepid nibble of 0.08% in difficult-to-handle intraday conditions currently above the coveted 1000 level.
It's that time again where bulls and bears see how hard they can "@$!$" with the other camp by engineering as many volley's back and forth across the 1000 level in the SP-500. Wednesday's muted daily action belies a humping tally of 14 crosses thus far courtesy of the increasing noise of the 5-Minute chart as price volatility continues to pick up for a traditionally good start to September.
The increase in volatility, as might be expected, hasn't been without token headline catalysts responsible for Breaking News "Stocks Move Up & Down In Early Trade" nuggets from CNBC. Following Tuesday's two better-than-expected reports [ISM and Pending Homes] which nonetheless found bulls in a discounting sort of mood, Wednesday's latest economic data doesn't lend itself to much more credibility with regards to traders acting rationally to get wherever it is they want to get too.
The marquee report that's ruffling a few feathers this morning is worse-than-expected job losses in the private sector. The ADP report showed a further contraction of 298,000 versus estimates of 250,000. The problem for bulls, so they tell us, is that after trending lower within a still very weak labor market, the results hint at steeper-than-expected losses for Friday's more comprehensive monthly government jobs data. "BOOyah!"
On the corporate side and in the increasingly popular realm of discounting of good news, bulls are working like dogs to be unimpressed with reports from NASDAQ 100 components Joy Global (JOYG) and Applied Materials (AMAT).
Machinery / infra concern Joy Global blasted profit views by $0.26 with earnings of $1.21 per share while also besting sales estimates on an increase of 5.8%. The company also boosted its FYO9 earnings outlook above consensus views of $3.93 with a range of $4.00 - $4.20, while offering cautious but optimistic words of encouragement on its business and investment climate.
Intraday, shares of JOYG are mostly flat with its nickel gainer to 37.40 after expressing some out-the-gate enthusiasm. Bulls have apparently dug into the fine print of the company's backlog which shows a significant decline. Or maybe they're just focused on the more guarded parts of its forecast-that is, if we're to believe the Prudent Man is really amongst us.
Separately, semiconductor manufacturer Applied Materials (AMAT) CEO updated the world late in Tuesday's session that it's seeing signs of capacity building up in China. The news fell on mostly deaf ears during the market's occupation with profit-taking. However, the story did seem to be picked up by this morning's bulls looking for news with which to defend some technical bargain-hunting with in the slightly pressured premarket.
Technically speaking, AMAT is one of the "clubbed and drubbed" in large cap tech. Shares of AMAT have defied "heat-seeking" [OptionMonster] naked call purchases here and there over the last two weeks by moving systematically lower before the Big Red Boat that is the market, took its own plunge lower. That said; AMAT is currently one of the few tech names that can claim a near test of its 50-Day MA and already hitting levels not seen since July.
Unfortunately and along the same lines of investors' reaction in JOYG, the Prudent Man appears willing to don that other type of discounting eyewear focused on a time when things will once more be much worse. Maybe they're looking at 2012 already? This market observer isn't sure. More importantly, seeing Mr. Market's (SPY) own defiant behavior aimed at teasing both bulls and bears as we enter the lunchtime nosh, the better "option" is to have softer and more forgiving position in dealing with a very Mad Money environment.
Chris Tyler
Senior Staff Writer & Options Strategist
Optionetics.com ~ Your Options Education Site
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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.
