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Wall Street's Wednesday Lunch Options

By Chris Tyler, Optionetics.com | Wed March 21, 2012 9:59AM PT

March Madness gamesmanship remains M.I.A. despite a bit of BearnankeSpeak Wednesday. As of 11:50 ET the SP-500 (SPY) is off fractionally by 0.10% as bulls play the game of zone defense above 1400.

On the officially-sanctioned economic front, testimony from Fed Chief Bernanke hasn’t exactly left a bearish mark but nor has it proven of benefit to bulls looking to support the market after a lengthy and overbought run.

Speaking before Congress today, the top central banker noted stress tests show the country’s top institutions have sufficient funds to “weather a hypothetical crisis” emanating from the Eurozone. At the same time, the Bearnanke stated, less hypothetically, that Europe remains “only at the early stages of what will be a long and difficult path of reform” according to MarketWatch.

Separately, existing home sales for February marked a five year high for the calendar month but largely in-line with forecasts in producing an annualized rate of 4.59M units versus consensus views of 4.60M. Also supportive, January data was revised from 4.57M to 4.63M. In sympathy, the Homebuilders ETF (XHB) is constructing against-the-tide gains of 1.60%.

In corporate confessional news, shares of Oracle (ORCL) are flat after surrendering more than 3% from Wednesday’s highs in the opening minutes of trade. Bulls are re-pricing a market that’s always right after backing away from mixed earnings highlights of a $0.06 profit beat, largely in-line sales growth or ennui of 3.4% and upside Q4 Non-GAAP EPS guidance of $0.78 - $0.83 versus consensus forecasts of $0.76 per share.

Elsewhere and in those intertwined markets of influence, shares of Apple (AAPL) are changing from a red to green varietal around the unchanged mark after scoring marginal fresh highs near $608. Separately, after finding  favor by bulls the past two sessions and seeing even larger relative strength gains over the past week and one-half, the Anchor Bankers (GS, JPM, XLF) are mostly succumbing to a mild bout of profit-taking.

Shares of the US Oil Fund (USO) are up 0.80% as bulls recalibrate some of Tuesday’s weakness as an error. With weekly and key moving average technical support still holding, headline backing comes from a surprise drop in inventories of 1.6M versus forecasts calling for an increase of 2.2M barrels and slightly beefed up worries regarding Iran.

Treasuries as represented by the 20-Yr (TLT) are attempting to confirm a weekly chart high-level double bottom of five months. Shares are up 0.80% and testing 200SMA resistance for a fourth time in five sessions.

And the VIX ($VIX) or the sometimes euphemistically called Fear Index is showing a bit of confident swagger with the instrument off 5.25% to 14.75%. Prices are below the 10SMA and showing little in the way of March Madness by bullish investors unwilling to give up the ball to bears.

Finally, in those sometimes accurate heat-seeking option markets, BofA’s (BAC) defiant but tiny bid in shares has found a few potential believers with bulls in its Weekly March and April 10 calls which have traded about 65,000 in total. With shares at $9.90, the whole number game appears to be in play again and somewhat like it was with the stock just below $5 back in December.

Back in December, there were plenty of less-than-correct grave forecasts warning of doom and gloom for shares due to a breaking of a level which makes the stock non-marginable and maybe unthinkable for larger institutions. Go figure. That’s right; they are and with a double in their pocket.


Chris Tyler
Senior Options Writer, former Market Maker & fulltime Option Hedge Hog Advocate
Optionetics.com ~ Your Options Education Site
Visit Chris Tyler’s Forum
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. 


Recent articles by Chris Tyler, Optionetics.com

September 21, 2012  -  Wall Street's Friday Lunch Options
September 21, 2012  -  Hot Shots: All Aboard or Train Wreck?
September 20, 2012  -  Wall Street's Thursday Lunch Options
September 19, 2012  -  The Expected Move: Bed Bath & Beyond Earnings
September 19, 2012  -  Wall Street's Wednesday Lunch Options


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