Spike in VIX Doesn't Deter Bulls


Last week's 17.1% spike in the CBOE Market Volatility Index (VIX), as well as a substantial equities sell-off, has not scared off optimistic investors, with U.S. stock futures pointed modestly higher across the board. Wall Street has an abundance of economic and earnings reports on this week's agenda; however, today's focus will remain on:

  • the VIX . Despite pulling back from last week's highs, the "fear gauge" is sitting dangerously close to the 20 mark
  • the whirlwind of economic data on the slate, with retail sales and the Empire State manufacturing index kicking things off
  • Spain , with yields on the fiscally strapped nation's 10-year bonds topping 6%
Among equities in focus, Disney (DIS ) takes its business overseas, while slipping sales of Barbie and Hot Wheels weighed on Mattel's (MAT ) top line.

And now, on to the numbers...

Dow, S&P and Nasdaq futures

Market Statistics

Equity option activity on the Chicago Board Options Exchange ( CBOE ) saw 1,111,331 call contracts traded on Friday, compared to 823,016 put contracts. The resultant single-session put/call ratio arrived at 0.74, while the 21-day moving average was 0.63.

NYSE and Nasdaq summary

Volatility indices

Currencies and Commodities

  • The U.S. dollar index is trading 0.2% higher this morning, with the greenback last seen at $80.07.
  • Crude oil is following in last week's footsteps , with the front-month contract 0.3% lower at $103 per barrel.
  • Meanwhile, gold futures are down 0.7% to trade at $1,648.10 an ounce.

Currencies and commodities

In equities news, The Walt Disney Company (DIS - 41.85) penned a deal with China's DMG Entertainment to co-produce DIS' next installment of its popular Iron Man series, according to The Wall Street Journal . The partnership comes amid bustling growth in China's movie industry, which saw a 29% year-over-year rise in sales to $2.1 billion. DIS is up 0.7% in pre-market trading.

Mattel, Inc. (MAT - 34.13) said its first-quarter earnings fell 53% to $7.8 million, or 2 cents per share, from last year's $16.6 million, or 5 cents per share. The results included expenses relating to MAT's $680-million acquisition of HIT Entertainment, equating to 4 cents per share. Respective 6% and 5% drops in global gross sales for MAT's core Barbie and Hot Wheels divisions caused overall revenue to backpedal 2.5% to $928.4 million. The results came in below Wall Street's forecast for earnings of 7 cents per share on $989 million in sales. MAT is looking at a 6.3% drop ahead of the bell.

Flotek (FTK - 12.17) now expects first-quarter revenue to surpass $78 million, with operating income arriving north of $16 million. Gross margin is predicted to expand to 43%. In the year-ago quarter, FTK netted $9.3 million on $52.9 million in revenue. "While a challenging natural gas market has had an impact on certain products, Flotek's proprietary chemistries continue to gain market share among liquids producers," said Chairman and CEO John Chisholm in a statement. The revenue forecast was comfortably above the consensus analyst estimate, which called for $72.9 million. FTK is on pace to start the session with a 2.2% lead.

Earnings and Economic Data

We're starting off the week with a flurry of economic reports, including retail sales , business inventories, the Empire State manufacturing index , and the National Association of Home Builders (NAHB) housing market index . A busy week of earnings begins with quarterly results from Citigroup ( C ) , Charles Schwab ( SCHW ) , and Gannett ( GCI ). Keep your browser at SchaeffersResearch.com for more news as it breaks.

Overseas Trading

European equities are modestly higher at last look, even as Spanish bond yields explore new peaks. Mining stocks have lured a few buyers, after analysts at Citigroup and J.P. Morgan both cited buying opportunities in the group. However, euro-zone banks are struggling, as traders price in some uncertainty over a potential round of downgrades from Moody's. At last check, London's FTSE 100 has added 0.5%, the German DAX has tacked on 0.4%, and the French CAC 40 is up 0.6%.

Overseas markets

Unusual Put and Call Activity:

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Unusual options activity - puts

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This article appears in: Investing , Options

Referenced Stocks: C , CBOE , GCI , SCHW

Schaeffer's Investment Research

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