A suspect and already aggravated Achilles Heel sidelines market bulls in Friday’s first half. As of 11:15 ET the SP-500 (SPY) is off 0.72% on a slightly less modest (doji) decision to take intraday profits.
Sporting an already aggravated Achilles, a fourth session of donning the wall-of-worry, climbing gear hasn’t yet been brandished by market bulls. Following five straight weeks of gains some 23% removed from the October corrective low and the SP-500 finishing less than 1.25% from its May 2011 highs Thursday; maybe some perspective within the Herculean lifting is in order, rather than trying to call a top on the bull?
In the spotlight, just when it seemed an agreement on Greek austerity measures had been carved in stone from the Parthenon, investors awoke to Eurozone leaders declaring they have unmet demands and/or a beef with Greece and require an agreement is signed into law prior to another round of funding and fueling escalating default fears. “BOO-yah!”
In those often intertwined markets of influence, the EUR/USD is off 0.60% and confirming a bearish doji gravestone top. “Not so fast Ursa Majors?” As the action follows Tuesday’s breakout from two weeks of lateral congestion, pressure in the currency pair is likely to be challenged from bulls looking to support the instrument off intermediate lows.
The VIX ($VIX) is up a handy 9.75% near 20.50% and reflecting some investor anxiety with prices roughly 11% above the 10SMA. The sentiment gauge hasn’t signaled a short-term overbought signal in excess of 15%, but the action is impressive as weekend decay collection efforts, typical of a confident investor, are very much absent from Friday’s recalibration of risk appetites.
"In the other hand" and for a second straight session, bulls are still showing a somewhat insatiable appetite for Apple (AAPL). With shares up a tide-bucking 0.55% to fresh, green-delicious highs, the price action is allowing for more constructive-looking profit-taking in the broader market. Friday’s bid in Apple follows a pair of target lifts on Thursday and a technical-based, gravitational pull towards the prized $500 level. “MOO-yah!”
Stateside on the corporate confessional side of things, a quieter secondary crop of varied earnings results finds shares of erstwhile growth and telecommunications outfit Alcatel-Lucent (ALU) soaring higher…relatively speaking. Alcatel-Lucent shares are up nearly 13.50%, but trading at the less spectacular price of $2.20 after the company topped Street or “Rue de la…” profit views of 8 euro cents with an actual profit of 19 euro cents. Looking forward, execs anticipate higher operating margins and strong positive net cash position for 2012.
For the bears, current but now likely curtained growth star Nuance Communications (NUAN) is off 11.50% after the voice-focused software application outfit announced a two cent profit miss, fell short of sales estimates with growth of 20.4% and issued mixed, bracketing FY12 guidance.
Finally and in those sometimes accurate heat-seeking option markets, “Is it a new Frontier?” Maybe it is for Alcatel-Lucent, but option traders in domestic telecom peer Frontier (FTR) and equally tarnished, technically speaking; appear to be betting on a sizable move, either up or down, when the company reports next week of Feb 16.
“Sizable” as mused above with ALU, is relative. Nonetheless, it looks as though 5,500 to 6,000 straddles priced for $0.40 per spread and initiated by buyers have traded. Existing open interest easily tops today’s activity, so the action could represent the closing of a position with shares squarely at the 4 strike in play.
Chris Tyler
Senior Options Writer, former Market Maker & fulltime Option Hedge Hog Advocate
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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.
