It’s “Mayday” for bears as a bulled up investor puts a smiley face on mixed economic data. As of 12:30 ET, the SP-500 (SPY) is up 1.10%, back above 1400 and breaking a bearish flag as fresh monies decide upon an extension of Best Six seasonality.
“Sell in May?” Investors appear more aligned with a bullish reworking of the “Go Away!” part of Street lore regarding seasonal tendencies which beget the period known as the Worst Six. Imbuing wallets to open, first-of-month inflows can’t be ignored, nor can May Day holiday observances overseas.
Not to be overlooked, stateside bulls left to their own “iDevices” have an easier go at manufacturing index gains when the iShares Bull ETF (AAPL) finds a bit of green delicious, relative strength to the tune of 1.20% after holding 50SMA support. Other than a bid predicated on the technical, company-specific bullish drivers found on traders iPhone's, iPads and Mac's are mostly absent from the radar.
On the officially-sanctioned economic front, PMI data from China and the UK came in mixed. Manufacturing for April from the world’s second largest economy and dominate global growth engine showed a slightly weaker-than-forecast increase to 53.3 but one marking a 13-month high.
Separately, UK manufacturing data was a bit less jolly. Britain’s PMI eked out a small expansion with a reading of 50.5 while dipping month-to-month. The sluggish action suggests its economy’s move back into recession last week may prove a challenging condition to shake off.
Stateside, national manufacturing data from the ISM has removed some concerns of economic weakness brought on this past week from Chicago PMI and GDP data. For April, the index rose to 54.8 and a ten-month high from 53.4 and contrary to forecasts calling for a modest dip to 53.0.
Tuesday’s report has some analysts estimating the data could be a sign of stronger job creation for April’s closely-watched BLS employment report due out on Friday. That said, for bulls yearning for another round of quant easing, having their cake and eating it too could present a quandary of sorts.
In those other intertwined markets of influence, today’s cheered data has in turn propelled shares of the US Oil Fund (USO) to a gain of 1.30% on fresh optimism for increased demand. Technically, the move is establishing a key breakout attempt of the 50SMA, the first in a month, as well as a second attempt at pushing shares past its November and January highs as part of a now established weekly uptrend.
The CBOE Volatility Index ($VIX) is confirming Tuesday’s bout of reinvigorated optimism. With bear flags broken and a less-than-doggish Dow hitting fresh highs, the sentiment gauge is off 5.50% near 16.25%. Currently the action is confident but not signaling complacency with the 10SMA still within 7% of the spot and intermediate lows of 13.66% set back in March, still 10% below.
Finally and in those sometimes accurate heat-seeking option markets, Monster Beverage (MNST) was apparently “not it” or at least, just not yet for the likes of Coca-Cola (KO). Following Monday’s Wall Street Journal-driven M&A buzz and intraday stock fizz-turned-flat, quite literally, we don’t mind taking a hat tip for our cautioned analysis regarding the day’s most active and briefly in-the-money June 80 call in yesterday’s WSLO column.
With shares of MNST now about 1% below the rumored blast-off point, the June 80s are once again, the busiest game in town. Our guess though is Tuesday’s volume of 1,700 compared to fresh open interest of 5,000 isn’t likely to improve upon that figure with a current market price of $0.55 and nearly $7.50 below yesterday’s most optimistic statement made and paid.
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.