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A void of bearish “tales and tails” in the financials, less-crude realities and bargain-hunting positioning with an edge have the bulls nibbling in Tuesday’s first half. As of 10:50 ET the “Cubes” (QQQQ) and “SPYder” (SPY) are up .41% to .53% on heavier seasonally-adjusted bull.

Following Monday’s latest financial anchoring (AIG, LEH, FRE, FNM, RKH) efforts, Tuesday has been a better day. With those stocks generally in position for headlines like “Bulls Snap Up Financial Bargains”, still-cautious sentiment has been pushed to the side for the time being and helped along by the likes of an analyst note from Goldie.

Spearheading Tuesday’s hoisting efforts; GSE’s Freddie (FRE) and Fannie (FNM) are up 12% to 20%. Shares are finding a second session of relative strength as Goldman stated investor anxiety over a bailout is unwarranted and manageable, if and when that day comes. Incidentally, according to ex-Goldie analyst Dr. Cramer, the Treasury is already at least two days late in acting and the source of Monday’s investor backlash. Hmm, I guess that means less-mad investors of the last two sessions in FRE and FNM are just hoping for a tax write-off at some later date.

Economic news has been mixed but mostly cheered on by traders and auto-pilot black box programs. Consumer Confidence strengthened by five points to 56.9 and above views of 53.0, while the expectations index climbed to 52.8 from July’s 47.2 reading.

Separately, two reports on housing came in mixed on further nasty-sounding headline results. Despite the muffled groans, a drop of 15K to 515K in new home sales and 15.9% slide for the S&P/Case-Shiller index have found a bid via the homebuilders ETF (XHB). Traders appear willing to see the information as further evidence of bottoming rather than additional ditch digging as the pace of declining housing data continues to weaken; in a good sort of way. Intraday, shares of the XHB are up .25 near 18.50.

Elsewhere and for the bulls, shares of Anadarko (APC) and Coach (COH) are helping provide some support for the market. Both companies implemented buyback programs this morning. For its part, the oil and gas giant authorized up to $5.0B or roughly 18% of its shares be repurchased, while luxury retailer Coach announced a program of $1.0B. Shares of APC are up 4.55% and COH is higher by 7.25%.

After a lower start to the day and early banter of “relief at the pump” style support for equities, Black Gold (USO) is up about .50% in typical volatile fashion. However, while reports of TS Gustav turning into a full-blown hurricane prop up prices on fresh supply concerns, bulls aren’t battening down the hatches in equities just yet as the energy complex (OIH, XLE) is enjoying the position of relative strength. Intraday, the OIH and XLE are up 1.20% to 1.35%.

For the bears, shares of NASDAQ100 component and semiconductor manufacturer Marvell Tech (MRVL) are being schnitzeled by 1.05 to 14.61 and helping pressure large-cap tech. Broker Jeffries reduced shares to “Hold” from “Buy” and cutting its price target to $15 per share.

The broker move in MRVL comes after some recent relative outperformance helped along by “Texas-for-Marvell” rumors and in front of Thursday night’s earnings report. Checking the options board and for a second-straight day, the September 15 Puts are the most active. In front of today’s downgrade, nearly 10,000 contracts traded with a closing price of 0.65 on 59% IV. Intraday, the contract has gained 0.35 to 0.40 on a pressured 8,100 contracts and implieds of 51%.

At 2:00 ET the FOMC Minutes will be released. Exiting the lunchtime hour and with the broader indices now sitting fractionally mixed around the unched mark, bulls and bears still remaining; can hardly wait, I suppose. But, wait they should, I reckon.

Both the SPY and QQQQ have been caught wiggling around key moving averages with lots of teasing and very choppy conditions for bulls and bears. In part, that technical indecision could be a result of dueling props such as a bearish EW4 in the SPY versus a more bullish-looking cup with handle in the QQQQ. Stat guys like sentimentrader.com note a short-term edge for the bulls through Friday’s close. That type of quant analysis could be worth paying attention too. However, my two cents says that with a very neutral VIX and directional trades in general not “handling” follow-through very well in either direction, bulls and bears shouldn’t get grilled trying too hard.    

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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