A helping hand for Greece and one from China allow another market milestone to be cautiously tested in extended conditions. As of 11:55 ET the SP-500 (SPY) is up 0.35% and nearing bullish accolades in tail-wagging action behind “Dow 13,000!”
Greece’s of late and suspenseful credit situation is finding bulls breathing somewhat easier Tuesday. On Monday EU policymakers agreed to a second round of bailout monies for the beleaguered Debt PIIGS constituent. But while default in the near-term has been averted, the stiff austerity measures required of Greece to secure an economic recovery are likely to keep traders from enjoying celebrations and libations like ouzo just yet.
Across the other pond and imbuing stateside bulls into further technical primping and posturing good for a few hollow “We made it!” cheers, China’s central bank trimmed its reserve requirement on member banks overnight. Reaction overseas has proven mixed following the Catch-22 monetary allowance to support economic growth, while intraday the iShares FTSE/Xinhua Index (FXI) is off 0.35%.
In those often intertwined markets of influence, the EUR/USD is off 0.20% in an inside doji despite Tuesday’s lead story of relief from an aggravated Achilles. That said and technically speaking, today's less-than-supportive nod from investors is occurring on the heels of a four day run off key 1.30 support.
The US Oil Fund (USO) is improving upon last week’s hefty 4.55% gain by tacking on an additional 1.25%. The move has technically produced a gap above key lateral congestion of three months. Relative strength is attributed to escalating tensions with Iran and loss of global supply from OPEC’s second largest producer.
The CBOE Volatility Index ($VIX) is mostly flat at 17.90%. Shares of the genteelly called “Fear Index” are more apt to stir up an image of complacency with the sentiment gauge about 6% below its 10SMA and firmly back in its trading range when market prices were last viewed so well-priced by the consensus back in May 2011.
And those sometimes precious metals of gold (GLD) and silver (SLV) are causing one bear’s weekly chart of lower highs and lows, to be likely second-guessed. Shares are up 1.75% and 2.75% respectively as geopolitical risks and / or either concern or cheer for Greece are setting the stage for a bullishly disruptive pattern breaker.
On the corporate confessional side, a bit of technical baggage being dropped instead of shopped from Wal-Mart (WMT), the world’s largest discount retailer is acting as a market drag on Tuesday’s gains. The thrifty goods and groceries outfit, disappointed investors with a two cent profit miss on earnings of $1.44 per share and mostly in-line sales growth of 5.9%.
To boot and with few selling this winter across much of the US, Wal-Mart also issued a bearishly-bracketing Q1 earnings and revenue forecast of $1.01 - $1.06 and $4.72 - $4.92 compared to consensus estimates of $1.05 and $4.90. Intraday, WMT is off 3.90%, testing its 50SMA for support and assisting bulls with profit-taking off a test of 13,000 in the Dow this morning.
And keeping the bull alive into its 13 and 21-week cycles off key December and October corrective lows, well-received confessionals of notice include fellow Dow constituent Home Depot (HD) and department store giant Macy’s. For its part, shares of HD are up 0.75% but pulling in from fresh relative and ten-year highs after beating on both its top and bottom lines and issuing slightly above-views FY13 EPS and sales guidance.
Separately, shares of Macy’s (M) are up 2.0% and hitting five year highs after topping profit forecasts by a nickel on earnings of $1.70 per share, seeing a narrow sales beat of 5.5% year-over-year and issuing squarely in-line and bracketing FY13 EPS guidance.
Finally and in those sometimes accurate heat-seeking option markets, in front of tonight’s earnings release, Dell (DELL) is seeing double its average contract count on volume of 42,000 with puts in front by a modest 1.15-to-1.0 margin. Most active on the session are the out-the-money March 16 put on volume of 8,700.
Priced for a measly $0.14 per contract and open interest of 6,500, bearish opening buyers in the mix are seeking, whether they realize it or not, a long shot play on an outsized downside reaction and simultaneously facing a likely volatility crush of about 50%. In saying that though, if “Dude, It’s a Dell” turns into something technically more menacing; then the limited risk, low dollar priced wager could always produce some sort of less-likely profits but some happy, go-lucky “Dude, It’s a Sell!” of held positions.
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.
