"Ahead of 'da Fed" bulls are in wait-and-see mode in Wednesday's first half. As of 11:00 ET the SP-500 (SPY) is off 0.15% on slightly subdued levels of bull.
In corporate confessionals, General Mills is serving up a sweet serving of shareholder value following its better-than-expected results. The cereal giant posted a profit beat of $0.25 with earnings of $1.28 per share. Lower ingredient and fuel costs were largely responsible.
Management at General Mills did emphasize continued strong consumer demand for its products and was confident enough to boost its FY10 EPS guidance above views of $4.26 with a range of $4.40 - $4.45. Based on Wednesday's early action, bulls are more than willing to enjoy the apparent sugar-coated high General Mills is serving. Intraday, shares of GIS are piling on 5% to 63.95.
An officially light earnings calendar has received the added bonus of a pre-announcement of the "Hip, hip, hooray!" variety. Shares of semiconductor manufacturer Xilinx (XLNX) are bid on the session after the company boosted its Q2 sales outlook.
Xilinx now sees a sequential gainer of 10% versus Street views of 4.1%. According to Briefing.com, management cited "broad-based strength across nearly all end markets and geographies." Intraday, shares of XLNX are up 5% at 23.85 and pulling back from out-the-gate cheering of about 7.5%, while the SMH tacks on about 1.60% at 26.05 and nears its one-month consolidation highs of 26.32.
Elsewhere, shares of Palm (PALM) are trading fractionally higher following back-to-back sessions of thrusting which resulted in cumulative breakout gains of nearly 22%. Today's somewhat stalwart price action has details of the company's well-chatted secondary acting as potential support for shares. The add-on of 20.0M shares priced at $16.25 is roughly 5% below last night's close and about 6% below current levels of 17.30.
While the price action in PALM is seemingly counter-intuitive, stock market logic by bulls dictates that larger institutional interests will show support for shares, albeit with the luxury of a price cushion to start. The net proceeds of the secondary which total $313.0M will be used for working capital and general corporate purposes. Bulls are crossing their fingers that doesn't mean the likes of seven-figure desks for the bigwigs are involved.
In those other sometimes intertwined markets of influence, both the Dollar (UUP) and treasuries (TLT) are quiet in front of 'da Fed's policy decision later this afternoon. Rates are all but written in stone to remain between 0.00% - 0.25%. Possibly coming into play and influencing the market, other than potential "sell the news" reactions, traders will be looking for clues as to the Fed's view on the ever-declining prominence of the Greenback and exit or easing strategies by the Treasury in credit-related markets.
Elsewhere, Black Gold (USO) is seeing a rather dramatic intraday drilling. Following a surprise weekly inventory build of 2.8M barrels versus an expected draw of 1.40M, shares of the US Oil Fund have sunk a hard-and-fast 4% near 35.50.
According to PFG analyst Phil Flynn, today's data is overtly bearish for crude as the report "reflects the real state of the economy in which demand for refined products is very weak and so supplies are high" via the CNBC grapevine. Technically, the action puts USO about 2% from consolidation supports of the past two months, while filling a smaller bullish price gap established back on September 4.
And finally, into the lunchtime hour and not much has changed other than market prices have lifted to being fractionally giddy by 0.10%--which doesn't really tell us much of anything. Well, that's not necessarily true. At the same time, shares of Apple (AAPL), which during yesterday's modestly bid session couldn't get out of its own way-are well bid by 1.85% and hitting fresh year-to-date highs.
I believe there's news regarding the company's "go ahead" to sell its iPhone in South Korea prompting the bulls' latest reason to "Buy, Buy, Buy!" It's hard to tell though with nearly two pages of important articles for traders to digest just for September 23. Nonetheless, I suppose the bulls can read all those bits and bytes later on their iPhones. For now, the action is enough to make the market's not-so Mad Money host very happy as last week's "rec" remains removed from the "wreck" type sometimes littering the financial landscape.
Chris Tyler
Senior Staff Writer & Options Strategist
Optionetics.com ~ Your Options Education Site
Visit Chris Tyler's Forum
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.
