A couple mostly targeted earnings and economic packages and nine straight days of higher highs haven't stopped bulls from rethinking their strategy just yet. As of 11:05 the SP-500 (SPY) continues to prod and poke its way to ten in a row with intraday gains of 0.25% on slightly lighter but above average noshing of green shoots.
In corporate confessionals, economic barometer FedEx (FDX) and the world's largest software database concern, Oracle (ORCL), have succumbed to some profit-taking but without delivering packages worthy of rattling Wall & Main.
For FedEx' part, last week's surprise upside forecast above Street views and rather sunny rush into shares has meant today's less-surprising in-line results of $0.58 per share and 53% y-o-y drop have been deserved of profit-taking without spreading gloom over a still very lush green shoots landscape. Intraday, shares of FDX are off 1.50% near 77.
As for Oracle, the company matched views with profits of $0.30, fell short of sales forecasts of $5.25B with actual results of $5.10B, but produced slightly better margins than expected. Going forward, management maintained its FY10 outlook of $0.35 - $0.36 that's "matchy-matchy" with current Street views.
Analyst calls have been mixed in Oracle. FBR Capital sees today's weakness in shares as an opportunity as it views Q1 as the company's most "at risk", believes its cost management efforts will produce positive results and "if" completed, the Sun acquisition should prove accretive in its first year.
For the bears, Deutsche is more concerned about Oracle's "significant falloff in infrastructure license growth" of 22% and its reliance on the application market, according to Briefing. And as for traders, they don't seem to "handling" things too well on the daily and weekly charts.
Intraday, with ORCL off 2.25% at 21.65, the stock has broken below the institutional support line of the 50-Day MA. Additionally, the disheartening price action has continued to put its weekly chart cup with handle breakout in jeopardy with shares now roughly 5% through its "proper but lacking volume buy point" of 22.71.
On the economic docket, no real surprises have also been enough to keep bulls feeding in elevated territories. August housing starts were squarely in-line with estimates of 598K, while July's data was upwardly revised. Building permits came in just shy of views by 4K with its annualized rate of 579K.
Separately, the weekly meal ticket of jobless claims came in below views by 13K, but remains elevated at 545K. And continuing claims jumped unexpectedly to 6.23M versus estimates calling for a flat reading of 6.10M.
In sector news, airline stocks (UAUA, DAL, CAL and LCC) are trying to find a lift from AMR (AMR). The company announced deep-pocketed passengers are on board with fresh liquidity of $2.9B for the debt-laden outfit. Intraday, shares of AMR are flying higher by about 15% at 8.50 and hitting fresh year-to-date highs in bumpy conditions.
On AMR's option front, the forecast by investors is akin to strapping on the seatbelt on "bid but normal" implieds which typically trade at a premium to statistical volatility. AMR's normal put-to-call ratio of just 0.42 is registering 1.00 with an equal amount of puts versus calls changing hands on an overall contract surge of 115,000.
Most active, a possible put spread in the January 2011 5 / 2.5 puts appears to be accounting for roughly 25% to 30% of the volume. However, without doing all the mandated homework, different contract totals popping up at different data vendors, decent open interest and a spread that's now well out-of-the-money in a technically-extended name; bottom-line the action translates into something far less important to anyone other than those involved.
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.
