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S&P 500 Seeks to Reclaim Support Atop 1,333

Posted
5/16/2012 8:35:00 AM
By: Schaeffer's Investment Research
Referenced Stocks:CBOE;CTRP;SPLS;SPX;TGT

Wall Street is brushing off an overall global-wide sell-off, as fear of euro-zone fiscal instability has taken hold of international markets. However, a buying mood has crept into U.S. markets, with futures on the Dow Jones Industrial Average (DJI) pointed modestly higher heading into today's session. The S&P 500 Index ( SPX ) is also set to tack on gains, with the broad-market barometer on pace to regain its footing atop the critical 1,333 mark .

Among equities in focus, J.C. Penney Company, Inc. (JCP ) is bracing for a post-earnings plunge; analysts' opinions may be swayed following Deere & Company's (DE ) quarterly results; and, short sellers could pile back on Abercrombie & Fitch Co. (ANF ) after its earnings 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 1,130,635 call contracts traded on Tuesday, compared to 911,576 put contracts. The resultant single-session put/call ratio arrived at 0.81, while the 21-day moving average was 0.72.

NYSE and Nasdaq summary

Volatility indices

From the Trading Floor

losing its footing 1,333 mark SPX

Sapp will also be keeping his eye on the " materials sector -- coal and steel stocks got pummeled yesterday. The CRB Commodity Index (CRB) continues to make lows, as does oil. This is partially a function of weakness in the euro/strength in the dollar, but it can also act as a proxy for global economic strength. It's worrisome to see it going straight down without really bouncing."

Currencies and Commodities

Currencies and commodities

In earnings news, J.C. Penney Company, Inc. (JCP - 33.32) swallowed a first-quarter loss of $163 million, or 75 cents per share. Excluding items, JCP's per-share loss narrowed to 25 cents, while revenue sunk 20% to $3.15 billion. Same-store sales for the Texas-based retailer backpedaled 19%. The results arrived well below analysts' expectations for a loss of 11 cents per share on $3.41 billion in sales. In an effort to improve its bottom line, JCP suspended its quarterly dividend, expected to garner the company an additional $175 million in cash. Near-term calls were popular on JCP ahead of earnings, with the stock's Schaeffer's put/call open interest ratio (SOIR) docked at 0.79. JCP is down 15.4% ahead of the bell.

Deere & Company (DE - 76.62) said its fiscal second-quarter profit rose 17% on a year-over-year basis to $1.056 billion, or $2.61 per share, while revenue improved 12% to $10.01 billion. The results easily beat the Street's forecast for a per-share profit of $2.53 on revenue of $9.71 billion. No fewer than 10 out of 17 analysts maintain a "hold" or "sell" suggestion toward DE. The stock is 1.8% higher in pre-market trading.

Abercrombie & Fitch Co. (ANF - 45.40) confessed that its first-quarter profit plummeted 88% to $2.99 million, or 3 cents per share, from last year's earnings of $25.1 million, or 28 cents per share. Sales rose 10% to $921.2 million, but same-store sales were down 5% for the quarter. Analysts were looking for a profit of 2 cents per share on $952 million in sales. Short interest backpedaled by 5.6% in the most recent reporting period, and now accounts for 2.9% of the stock's available float. ANF is poised for a 6.2% drop right out of the gate.

Earnings and Economic Data

Housing starts , building permits, industrial production and capacity utilization, and the regularly scheduled crude inventories report will hit the Street today. Also, the Federal Open Market Committee (FOMC) will release the minutes from its April meeting. Meanwhile, investors will get a chance to mull over earnings results from Staples ( SPLS ) , Target ( TGT ), Ctrip.com ( CTRP ) , Hot Topic (HOTT), Limited Brands (LTD) , Chico's FAS (CHS), and Cost Plus (CPWM) .

Overseas Trading

Asian markets ended broadly lower today, as ongoing political gridlock in Greece has forced a second round of elections. With no clarity forthcoming from the euro zone, traders were further rattled by news of a slowdown in loan growth by China's Big Four banks. In the same gloomy vein, BHP Billiton Chairman Jacques Nasser warned of "further easing" in commodity markets amid slackening demand. By the close, Hong Kong's Hang Seng fell 3.2%, South Korea's Kospi lost 3.1%, China's Shanghai Composite slipped 1.2%, and Japan's Nikkei shed 1.1%.

Lingering uncertainty over Greece is also weighing on European markets, after reports indicated that new elections would be held on June 17. However, French banks are a surprising pocket of strength, with Credit Agricole leading the bullish charge after an upgrade from Societe Generale. At last look, London's FTSE 100 is off 0.1%, the German DAX is down 0.4%, and the French CAC 40 has climbed 0.7%.

Overseas markets

Unusual Put and Call Activity:

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Unusual options activity - puts

Unusual options activity - calls

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