Bulls are held back by an aggravated Achilles Heel from Greece, but an Apple a day keeps the action optimistically constructive. As of 11:15 ET the SP-500 (SPY) is under modest pressure once again by 0.05% as fresh and waiting bids underneath the market continue to trump cries of “Overbought!”
The wall climbing gear is out once again as hotter-than-forecast inflation out of China and a flood of “Yes!”, “No!”, “Maybe!” and “We’re still waiting” headlines tied to Greece have once again put bulls on edge but failed to produce any hard, fast profit-taking.
Overnight, China announced consumer prices in January spiked by 4.5%. The reading compares to forecasts of 4.0%, breaks a five month trend of softening inflation and has a few hawks chirping over the country’s central bank inability to move more aggressively with monetary easing.
In those often intertwined markets of influence, the EUR/USD is up 0.13% and improving slightly on Tuesday’s breakout from two weeks of lateral ennui despite a still pending resolution on a new and improved austerity package for Greece.
The VIX ($VIX) is up 1.70% near 18.50%. In more of the same grinding style action, the sentiment gauge is trading squarely on its 10SMA in a neutralized short-term position with nominal prices lending support, historically speaking, to bulls.
Shares of NASDAQ and SP-500 heavyweight Apple (AAPL) are exerting pressure to index types to step up their game Thursday and support the broader market. Shares of the $460B market capper are up 4.15%, hitting fresh all-time green highs and inching their way towards the $500 level after brokers Needham and Canaccord raised their price targets on the stock to $620 and $665.
For its part, Needham raised its price target as part of its semi-annual update which noted faster-than-expected sales growth in the tablet market and in turn, has beefed up the broker’s sales forecast for the company’s iPad.
The solar industry group (TAN) is sizzling higher following a bullish report from Norwegian-based polysilicon outfit Renewable Energy. As part of its earnings release, management noted the global solar industry is showing signs of oversupply abating and expects demand to pick up in both Asian and US markets.
Leading the price flare higher and sporting liquid option markets, Trina Solar (TSL) is up 22%, Yingli Green (YGE) by 17%, LDK Solar (LDK) is up 14% MEMC (WFR) 10.50% and First Solar (FSLR) is up 6.25%.
Stateside on the corporate confessional side of things, shares of Cisco (CSCO) are off narrowly by 0.25% after bouncing off a test of its 10SMA which apparently acted as better support for shares than its all-around strong earnings report and one completed with a quarterly dividend increase of $0.02 to $0.08 per share and bullish, above views guidance.
In those sometimes accurate or maybe inaccurate, heat-seeking option markets, pricing of Cisco's Weeklys ATM straddle which suggested a 68% chance of prices remaining within a devilish range of 6.66% have been handed an easy, but well-off-the mark victory. In the process, the Feb 20 straddle has gone from a previously discussed $1.09 on 90%IV to $0.44 and implieds cut down by more than 50% into the high 30s to mid 40s.
And finally, recent IPO Groupon (GRPN) and internet dealmaker is seeing its shares loss 13% after issuing mixed results. The outfit posted a surprise loss of ($0.02) due to the tax man, but issued upside Q1 sales guidance of $510M - $550M versus Street views of $501M. However, it appears Thursday’s bulls are receiving a “cut rate haircut” of sorts today on fears of saturated growth in its US market.
Chris Tyler
Senior Options Writer, former Market Maker & fulltime Option Hedge Hog Advocate
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