Stocks Teeter Near Significant Round-Number Marks


With the Labor Department's nonfarm payrolls looming, and another week chock-full of earnings ahead of us, futures on the Dow Jones Industrial Average (DJI) and the S&P 500 Index ( SPX ) are hovering just below breakeven. However, as Senior Options Strategist Tony Venosa contends, "Today is the last day of the month, so possible window dressing could help with a continued push upwards." Also generating buzz,:

  • Senior VP of Research Todd Salamone highlights several round-number levels the major market indexes have tackled recently.
  • the CBOE Market Volatility Index (VIX) slid 6.4% last week. Will the "fear gauge" continue to march lower?
  • after the SPX enjoyed its first daily close above 1,400 since April 3, Venosa projects the next possible move higher for the broad-market barometer.
Among equities in focus, options players preferred Humana Inc.'s (HUM ) near-term calls ahead of earnings, while short sellers may be thrilled with LDK Solar's (LDK ) quarterly results.

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 1,247,216 call contracts traded on Friday, compared to 747,281 put contracts. The resultant single-session put/call ratio arrived at 0.60, while the 21-day moving average was 0.62.

NYSE and Nasdaq summary

Volatility indices

From the Trading Floor

Venosa remarked, "On Friday, the SPX pushed above that round-number 1,400 level . We will get plenty of economic data this week, including Friday's employment report for April. We may visit the 1,422 level on the SPX, which represents the high for the year, as well as multi-year highs."

Currencies and Commodities

  • The U.S. dollar index is higher this morning, with the greenback last seen up 0.2% at $78.86.
  • Crude oil has pulled back from last week's gain , with the front-month contract 0.8% lower at $104.14 per barrel.
  • Gold futures are churning south of breakeven, with the malleable metal hovering near $1,664 an ounce.

Currencies and commodities

In earnings news, Humana Inc. (HUM - 87.82) said its first-quarter profit fell 21% to $248 million, or $1.49 per share, while revenue rose 11.2% to $10.22 billion. The bottom-line results fell short of Wall Street's estimate for a per-share profit of $1.53 on $10.12 billion in sales. HUM's short-term calls were popular ahead of earnings, with the stock's Schaeffer's put/call open interest ratio (SOIR) docked at 0.32. HUM is down 3.2% ahead of the bell.

LDK Solar Co., Ltd. (LDK - 2.96) swallowed a fiscal fourth-quarter loss of $588.7 million, or $4.63 per American depositary share ( ADS ), while revenue dropped 54% to $420.2 million. The results fell far short of analysts' expectations for a per-share loss of 85 cents on $431.6 million in sales. For the current quarter, LDK forecast sales of $190 million to $230 million, well below Wall Street's call for revenue of $397.2 million. Short sellers reduced their bearish exposure by 3.6% in the most recent reporting period, but short interest still accounts for a lofty 28% of the stock's float. LDK is looking at an 11.2% plunge right out of the gate.

Earnings and Economic Data

The week kicks off with personal income and spending, as well as the Chicago purchasing managers index (PMI) . We'll hear earnings results from Anadarko Petroleum ( APC ) , Herbalife ( HLF ), Shutterfly (SFLY), (SOHU) , Sourcefire (FIRE), and Veeco Instruments (VECO) .

Overseas Trading

Asian markets ended modestly higher today, with banking stocks leading the rally in Hong Kong in the wake of a solid earnings season. Meanwhile, shipping issues paced the advancers in Seoul, bolstered by well-received first-quarter results from Samsung Heavy Industries. By the close, Hong Kong's Hang Seng gained 1.7%, while South Korea's Kospi rose 0.3%. Markets in mainland China and Japan are closed for holiday.

European equities are churning south of breakeven at midday, following yet another negative note from Standard & Poor's. After downgrading Spain's sovereign debt late last week, the agency today lowered its rating on 16 of the country's financial firms. Additionally, government data showed Spain's GDP falling 0.3% during the first quarter, confirming that the nation is in a recession. At last check, the French CAC 40 is off 1%, London's FTSE 100 has lost 0.6%, and the German DAX is down 0.2%.

Overseas markets

Unusual Put and Call Activity:

For an explanation of how to use this information, check out our Education Center topics on Option Volume and Open Interest Configurations .

Unusual options activity - puts

Unusual options activity - calls

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This article appears in: Investing , Options

Referenced Stocks: ADS , APC , CBOE , HLF , SPX

Schaeffer's Investment Research

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