Mostly decent but accounted for corporate confessionals and economic data find bulls taking light profits. As of 16:10 ET the SP-500 (SPY) is off a bearish-looking 0.15% after poking and prodding its way to ten in a row on lighter but above-average investor maneuvering.
Not that it really matters after ten straight days of tagging higher highs coupled with gains of more than 7.25%, but in the end trader talk can point to a "Sell the news" type response by investors.
On the earnings side, preannounced upside guidance in FedEx (FDX) which throttled shares higher last week meant today's updated in-line confirmation could be used as an excuse for profit-taking. And so it was, actual results of EPS $0.58 per share and an unsurprising 53% y-o-y drop in profits amounted to FDX falling by 2.23% to 76.46 and testing its gap lows set last week.
Separately, Oracle (ORCL), the world's largest software database concern managed to let tech bulls skirt the issue of business spending on its largely in-line results. For their part, bulls in Oracle did appear somewhat rattled by the report as shares fell 2.76% to 21.53 and below the 50-Day MA for only the second time since June.
As for what was on the mind of investors as they moved further below ORCL's classic cup-with-handle "proper buy point" of 22.71, Oracle managed to match estimates with profits of $0.30, but fell short of sales forecasts by $150M with revenues of $5.10B. The company did show slightly stronger-than-expected margins and maintained its in-line FY10 outlook for earnings.
Analysts were mixed on Oracle going forward. Deutsche expressed concern over the company's "significant falloff in infrastructure license growth" of 22% and its reliance on the application market, according to Briefing. It appears that too may have been on the minds of investors.
The economic docket held mostly pleasant news but made more difficult for bulls to cheer in lieu of the market's quick percentage romp to eleven-month highs. Philly Fed data completed a decent series of regional manufacturing beats of late in delivering a figure of 14.1 versus estimates of 8.0.
Housing starts climbed above an upwardly revised July but matched views of 598K for August. Building permits were a tad soft at 579K but up from the prior month's 564K. And 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.
On the heat-seeking option front, pre-expiration activity means exaggerated activity is the norm. With that caveat in place, Citigroup (C) was atop the most active list with more than 1.3M contracts changing hands and sporting a strong bias of 72% in the calls.
Wells (WFC) was popular with the bears with than 75% of its volume placed in the puts. Accounting for a bit less than 40% of the day's volume, one large ratio spread [27.5K x 55K] was priced at $0.65 using the October 30 and 27 puts. For the buyer or front-spreader, the max reward is if shares move down to the sold strike by expiration. Continued weakness however would put the trader at risk due to the net short position count below the 27 strike.
Finally, in the often fishy land of rumors and "takeover chowder", shares of cancer research upstart Dendreon (DNDN) surged nearly 8% on the session in clearing a four-month long flat but volatile base to all-time-highs. Thursday marked the second session of potential suitors and perhaps a premium price tag to secure those rights of $40. In saying that, Option traders were busy by a four-to-one margin in the calls with total volume jumping eight-fold to nearly 113,000.
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.
