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“It Seems Like Old Times” as marquee large cap tech takes center stage with bulls. Elsewhere though, some teardown in housing, mixed reports and technical incentive to schnitzel have the major averages slightly underwater. As of 10:45 ET the “SPYder” (SPY) and “Cubes” (QQQQ) are off .33% to .62% on moderate trade.

Like a movie that conjures up smiles from days past, old stars like Qualcomm (QCOM), Amazon (AMZN) and newly-anointed marquee heavyweight Baidu (BIDU) continue to do their part to keep the market’s rally an enticing show for bullish investors. Shares of QCOM are up nearly 17% after announcing a long-awaited settlement and new royalty arrangement with Nokia (NOK) as part of its in-line earnings and slightly better-than-expected 19% sales jump.

Shares of Amazon (AMZN) have vaulted higher after besting expectations with profits of 26 cents per share. Results more than doubled last year’s profits on revenue increase in excess of 40%. Management also soothed any concerns by guiding higher on its full-year sales. Shares are up 10.50 points or 15% and breaking through all kinds of easily-spied technical lines in the sand that sometimes don’t make sense or “cents” for those looking to “Sell the news.”

“Do you Baidu (BIDU)?” Shares of the China-based search engine and NASDAQ component are atop the Points Gainer board, up 15.50% or 45 points near 333.50. Last night the company reported a 13 cent profit beat with earnings of 1.11 per share on a stronger-than-expected 124% jump in sales.   

For non-directional option traders that held Baidu through the report, the ATM 290 straddle priced for 33.50 on implieds of 75% has worked quite well with a current price tag of roughly 53 translating into a gainer of 60%. The ensuing “vol crush” in Baidu options which is now approaching year-to-date lows in the 50’s has ultimately held little impact on that particular strategy due to the linear move and now deep in-the-money high-delta position.  

On the economic side of what makes traders do the things they do, weekly claims have likely unnerved a few bulls reading the headlines. Today’s data saw filings increase by 34K to 406K and above views of 372K. That being said, the smoothed 4-week moving average and its slight increase to 382.5K is still “comfortably below recession-like levels” per Briefing.com.

Separately, existing home sales fell to a ten year low and below estimates. June sales came in at 4.86M annually adjusted units, missing views by 80K and unexpectedly dropping from the prior reading of 4.99M. Shares of the related homebuilders ETF (XHB) are off 6% at 17.55 as the report coupled with a much larger-than-prepped-for-loss from Ryland (RYL) are pressuring recent bargain-hunting efforts and lightening fast percentage gainers into a reversal candle on the daily perspective.

And finally, I could swear its “The Year of Natural Gas” according to some giddy-of-late, “Got yer back!” financial hosts. However, with the US Natural Gas ETF (UNG) off an astounding 33% for the month of July, that easily-served up determination has been long forgotten….except a likely mad money fan base. Today’s extension to the downside has carryover momentum and some weekly intraday data to thank. Intraday, the UNG is off 2.55 at 43.10.

Is it time to “Monbacky?” Technically speaking, the three week long price walloping to the downside does look close to the capitulation stage. Of course, folks could always send Dr. Cramer a request for an update. However, it’s this corner’s opinion that you’re more likely to get an answer when happy days are here again rather than in the here and now; if history does indeed repeat.

For those that see things differently and on their own terms; a less maddening way to navigate the bull might be by rolling up the sleeves and doing homework like investigating a limited risk starter position such as a vertical spread. In one trader’s opinion, that type of advice certainly sounds and looks a lot more trustworthy when it comes managing yesterday’s latest and greatest during the best and worst of times.

Chris Tyler
Staff Writer & Options Strategist
Optionetics.com ~ Your Options Education Site
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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. 

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