Germany’s production of “Curb Their Enthusiasm” and a pair of concerning, stronger-than-expected data points find bulls modestly cautious in Tuesday’s first half. As of 10:55 ET the SP-500 (SPY) is off 0.05% as a second session of kinda, sorta minding the gaps, following Olympic-sized gains, is played out.
On the heels of last week’s back-to-back episodes of “Glee”, a more dumbfounded, sour production of “Curb Their Enthusiasm” is playing out with investors. Featured this morning, a B-list German official indicated the country’s lack of support for additional ECB monetary support and instead stated those governments’ requiring help should look to the current bailout fund. Unsurprisingly, pent up expectations of fresh monetary stimulus, has been greatly reduced.
Stateside and with the FOMC Decision on deck for Wednesday, stronger-than-forecast results on regional manufacturing and sentiment have proven modestly bittersweet for investors also waiting on a friend in the Fed. By the numbers, Chicago PMI for July rose from June’s 52.9 to 53.7 and compared to forecasts of a small dip to 52.5. Similarly, Consumer Confidence jumped from 62.7 to 65.9 which beat views of 62.0 and marked the gauge’s first gain since April.
In those intertwined markets of influence the EUR/USD is up 0.31%. A demanding Germany and comments this morning by France’s Hollande backing the currency are primary drivers, alongside a simple two-day pullback which has reclaimed the key 1.232 level.
Comex Gold (GLD) is under modest pressure of 0.25%. A helpful weaker Greenback (UUP) has been upstaged by traders currently less sure about policymakers’ timeline at unveiling global stimulus measures. Technically, GLD continues to hold last week’s breakout from a symmetrical triangle formed off a test of its December bottom.
The VIX ($VIX) is up 1.5% to 18.30%. Tuesday’s bid finds the sentiment gauge at rather neutral absolute levels historically, as well as relative to its mean-reverting 10SMA, which is currently 4% below near 17.65%.
On the corporate side, sometimes the apple core can fall far from the tree as semi chip, audio specialist Cirrus Logic (CRUS) is showing with shares up 22%. Management issued the “Buy, Buy, Buy!” signal to investors last night with narrowly mixed and unexciting quarterly results but topped off with very stimulating, above-views Q2 sales guidance of $170M - $190M versus the consensus forecast of $131M.
Technically, Cirrus Logic, whose largest customer is Apple, is hitting its best levels since the Dot.bomb bust and extended past any buy points tethered to the fear of gravity or gaps getting filled.
In sympathy and with a little likely help from end of quarter window dressing, the iShares Bull ETF (AAPL) is up 2.0%, OmniVision (OVTI), Avago (AVGO) and Triquint (TQNT) are adding about 3.5% apiece and Skyworks (SWKS) is firing higher by 6.0%.
For the bears, fine leather goods purveyor Coach (COH) is showing a flair for some well-tanned bull with shares off nearly 17%. The company issued lower “soft” guidance for FY13 due to the current muted consumer environment (except iPhones) and emphasized the period as being an “investment year.”
And “passing through” nicely with bulls, shares of Herbalife (HLF) are up 7.0% after the dietary supplements provider easily topped profit views by $0.14 on earnings of $1.10 per share and beat sales estimates with growth of 17.3%. Assisting in the feeding frenzy and following last quarter’s bout of technical stomach pains, notorious hedge fund operator and HLF bear, David Einhorn, didn’t make an unwanted encore appearance during Q & A.
Finally and in those sometimes accurate heat-seeking option markets, in a time when seemingly both bullish and bearish patterns are equally prone to failure, it’s not hard to appreciate why Apple (AAPL) is in the top spot for unusual activity on the Naz’ and sporting volume of nearly 500,000 contracts. Following AAPL’s recently failed attempt at bullish handle construction, an earnings-related channel breakdown and now, “right-back-atcha” price action; bull, bear or hedgehog decisions are easier to swallow with deliciously liquid apple juice.
Senior Options Writer, former Market Maker & fulltime Option Hedge Hog Advocate
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