Wednesday’s Vital Data: Macy’s, Home Depot and Bank of America

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U.S. stock futures are inching lower this morning after a dull Tuesday trading session. Equities took a well-deserved breather near pivotal resistance (2,800) for the S&P 500 .

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Here's how they did:

Heading into the open, futures on the Dow Jones Industrial Average are down 0.19% and S&P 500 futures are lower by 0.18%. Nasdaq-100 futures have lost 0.25%.

The CBOE saw a slight snapback in its single-session equity put/call volume ratio to 0.6. Meanwhile, the 10-day moving average stayed pat at 0.59.

Options traders zeroed in on earnings reports in Macy's (NYSE: M ) and Home Depot (NYSE: HD ). Elsewhere, Bank of America (NYSE: BAC ) options were popular during a breakout attempt.

Let's take a closer look:

Macy's (M)

Macy's reported fourth-quarter earnings Tuesday morning and beat the Street's estimates. The retail giant, whose stock has struggled recently, earned $2.73 per share on revenue of $8.46 billion. Earnings were down 3.5% from the same quarter last year but still arrived higher than analysts' estimates of $2.53 per share.

M stock initially rallied as much as 5.1% before profit taking trimmed the gains to 1.44%.

The price bump did nothing to change the long-term trajectory of Macy's share price. It remains submerged beneath a falling 20-day, 50-day, and 200-day moving average. With the broader market hot as a pistol, M stock looks particularly grim on a relative basis. Watch for a break below the $24 support zone to signal the next down-leg has begun.

The earnings release lit a fire under options trading. Calls led the way as total activity ramped to 517% of the average daily volume, with 133,193 total contracts traded. Calls accounted for 57% of the sum.

Ahead of the event, the expected move based on options pricing was $2.14, or 8.8%. And that makes the measly 1.44% gain a real dud. Chalk this earnings season up to a big win for volatility sellers. Yesterday's volatility crush drove the reading down to 37%, or the 28th percentile of its one-year range.

Home Depot (HD)

Home Depot saw a volatile session yesterday after reporting fourth-quarter earnings that left investors dissatisfied. The home improvement retailer raked in $2.09 per share on revenue of $26.5 billion. Guidance for 2019 earnings was underwhelming at $10.03.

Despite the initial plunge, HD stock fought back to end down just shy of 1%. Ahead of the event, HD shares had been improving from its fourth quarter beatdown. Since bottoming before Christmas at $158.09, they were up 20% heading into Tuesday's report.

With the bullish response to the down gap, traders now have a precise level to trade against. If HD can remain above yesterday's low or $182.80, then the path of least resistance remains higher.

The earnings excitement infected options trading yesterday, with puts outpacing calls by a slight margin. Activity swelled to 452% of the average daily volume, with 100,658 total contracts traded. 52% of the total originated with puts.

With the sharp rebound in prices after the morning plunge, volatility sellers came out big winners. The expected move was $6.13, or 3.2%, so the 0.9% drop was well within expectations. Moving forward, premiums are pricing in daily moves of $2.26, or 1.2%.

Bank of America (BAC)

Despite a light day on the news front, Bank of America landed in the most-active options list. Calls led the way accounting for 59% of the day's take. Total activity ticked higher to 111% of the average daily volume, with 257,113 total contracts traded.

Since gapping higher on earnings last month, BAC stock has built a sideways base with easy-to-spot support and resistance zones. We've seen multiple tests of the $29.70 ceiling, and I suspect it's only a matter of time until buyers break through. That's the level to trade against if you're looking to buy.

Implied volatility remains subdued at 23%, or the 21st percentile of its one-year range. Premiums are pricing in daily moves of 42 cents, or roughly 1.4%.

As of this writing, Tyler Craig didn't hold a position in any of the aforementioned securities. Check out his recently releasedBear Market Survival Guideto learn how to defend your portfolio against market volatility.

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The post Wednesday's Vital Data: Macy's, Home Depot and Bank of America appeared first on InvestorPlace .

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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