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Following one day of reflection, a daily doji attempts to find bullish inspiration Wednesday out of Asia. As of 10:55 ET the SP-500 (SPY) is up a milder 0.38% versus it's out-the-gate salute to fallen bears.

Strong reports out of Asia has trumped stateside and World Bank policymaker calls for maintaining a strong US Dollar and inspired more of the same ol', same ol' motion of confidence from bulls out-the-gate Wednesday. A better-than-expected report on Chinese factory output which saw growth climb to a 19-month high for October has been the primary catalyst for investors.

A second release from Japan has also provided assistance for Wednesday's stateside bid. Data related to core machinery orders jumped 10.50% for September. The report marks the beginning of an upward trend per optimistic and increasingly risk-averse bulls feeding further on the now infamous carry trade and supplying tied-at-the-hip bids into commodity-related assets.

Leading the charge for bulls are the usual suspects of sector proxies (GDX, OIH) and individual picks and shovels (CAT, FCX). Relative strength performances of 1.00% to 4.00% at their optimistic best and fresh year-to-date highs in more than a few venues have been par for the session thus far, while the lowly Greenback initially slumped back towards its year-to-date lows.

Intraday, Cliffs Natural Resources (CLF) is showing a bit of extra gumption. Bulls have bid shares up by about 3.50% after the iron producer boosted its quarterly dividend to $0.0875 and more than double its former distribution price of $0.04 per share. 

The annualized payout of $0.35 from CLF is still less than 1.00% of the stock's current market price. However, the move does provide bulls with an extra measure of security that some company's books and financial position, are in order.

In corporate confessionals, shares of Macy's (M) are being returned to the tune of 7.50% near $18 after posting a four cent beat, but an overall of -$0.03 per share on a year-over-year sales decline of -3.9%. Separately, recent IPO and alternative energy start up A123 Systems (AONE) is also being unplugged by bulls.

Shares of AONE are off about 5% near $17.10 after missing estimates by a rather large -$1.45 and producing a quarterly loss of -$1.78 per share. The company did manage a token but small revenue beat of $23.60M versus estimates of $19.20M for growth of 3.10%.

Finally, homebuilder Toll Bros (TOL) is making it a second pleasant day for the corner of Wall & Main Streets. Following Beazer's (BZH) surprise profit beat, Toll Bros. updated investors with a sunnier forecast for its quarterly results due out on December 3.

Beefed up guidance from Toll Bros. was highlighted by a 42% increase in Q4 net signed contracts valued at $430.8M and word of cancellations returning to "normal historic averages" according to Briefing.com. Shares of TOL are up 14.50% at 21 and in the process of constructing the right side of a very, very deep base(ment).

In that sometimes accurate heat-seeking option action, Green Mountain Coffee (GMCR) implieds continue to percolate to three month highs in front of tonight's earnings release. With shares up about 2.50% at 74.85, the November 80 call is the most active for a second straight session on volume of more than 3,600.

The contract is up $1.10 to $2.85 as it benefits from both its delta and a strong jump of about 20 volatility points from the mid 80s to the low 100s. With the call still well out-of-the money, the risk of carrying increases due to an imminent volatility crush and just seven days left until expiration. That being said, bulls will need a beneficial jump in share price in order to keep those prices percolating, to be quite certain. A bit more on that subject matter, but based on last night's option activity can be found in this morning's Option Watch.

Finally, an unheralded but important under-the-radar breaking news finds the VIX Stretch or the differential between the VIX cash and its 10-SMA hit near a disturbing 17% at session lows of 21.61% Wednesday. Additionally and confirming bulls have more than likely put themselves on terribly thin ice is the cash's percentage swoon of about 35% over the past seven sessions. As much, Wednesday's early celebration looks like a good reason to "sell-e-brate" with cheaper insurance and much softer levels of bullish affection for the market's confirmed, but well-extended rally.

Chris Tyler
Senior Staff Writer & Options Strategist
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.

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