Somewhat soothing inflation, growth and corporate news are taking a backseat to Expiration Friday tradition as the indices square off in typical sparing fashion and no real punch. As of 11:15 ET, the NASDAQ Composite ($COMPQ) and S&P500 ($SPX) are off -.05% to -.32% on heavier and anything but, higher levels of investor satisfaction.
Quadruple Witching versus Triple Witching gives investors one more reason to see something other than headlines at work. In typical low volatility drama and unlike Wall Street lore might insist upon, the indices are bobbing and weaving, but ultimately saving any real enthusiasm or concerns until after certain critters have all but expired. As for the headlines this Expiration Friday, the news has been actually decent overall, unless you're a fan of the U of M.
A survey on consumer sentiment delivered courtesy of the University of Michigan dropped to 88.8 and slightly below Wall Street estimates of 90. Can we blame them for being discouraged? Some analysts might point to the number reflecting increased concerns over a recession led by sub prime mortgage anxieties. However, with U of M not being represented in another version of home-gamer March Madness, I've got my doubts as to the significance of it all.
The real headliner for investors still watching the other game and in need of play-by-play action: the CPI report released in the premarket might suffice. The week's most anticipated report eased some concerns core inflation matched expectations calling for a rise of .2%. After Thursday's more volatile, but higher PPI readings, the news is somewhat of a relief for bulls wanting to play ball, but ultimately not enough evidence to produce a unified "game on!" situation. The year-over-year figure for the core reading remains elevated at 2.7%, which is also above the Fed's targeted comfort zone. However, analysts do point out that the data will decline as higher back end data are dropped in the coming months and that the inflation trend remains stable, all of which is good news for market bulls.
Better news for market bulls comes courtesy of a report on industrial production, as well as a slug of news on the corporate court. In an intraday release, the "IP" data registered an increase of 1.0%. The data point was .7% above Wall Street's estimates and the largest in nearly 1 1/2 years. For investors that have become increasingly focused on the state of economic growth and the "R" word popping up here and there in recent weeks, no doubt the report is a welcome one.
On the corporate side, a bit of large capper news is holding some influence with investors. Technical and value-based bargain hunters are lifting Starbucks (SBUX) by nearly a point to 30.57 after the stock was added to Goldman's Conviction Buy List. Management at Hewlett Packard (HPQ) announced an increase of $8 billion in its existing buyback program. Intraday shares are up 25 cents at 39.95. And pharma concern Schering Plough (SGP) is finding investors snapping up shares by 50 cents to 23.58 on the heels of an upgrade to "Buy" from "Neutral" at Merrill Lynch.
And finally, in the down but not totally out sub-prime space a third day of relief is being lent a hand by a few catalysts. Lenders and prime suspects Fremont General (FMT) and Accredited Home (LEND) both came out with some good news this morning. The former confirmed that Credit Suisse has agreed to increase its credit line to $1 billion, while the latter has found some bargain hunters willing to âsnap up' $2.7 billion worth of loans at a deep discount. Also helping the group, structured financier specialist Moody's (MCO), which has seen some investor fallout of late, was upgraded to a "Buy." Countrywide (CFC) was raised to a "Market Perform" from "Underperform" at second or maybe third-tier broker Keefe Bruyette. However, with a decliner of 30 cents to 35.17, E.F. Hutton they're not, quite apparently.
GROWTH & MOVERS COVERAGE
Industry / Sector
RS / EPS 1YR%
Select reports scheduled after the market close and in the premarket:
Industry / Sector
Q-Estimates / Prior Yr.
.18 / .30
Economic releases on tap:
Wall Street Forecast
INDICES & MARKET MOOD
It's a very quiet Expiration Friday, aside from the record-breaking number of shares changing hands in the first thirty minutes of action on the NYSE. For some reason, of those 630 million shares I'd take a gander that for technicians out there, the movement and meaning of it all, was a whole lot less important. As it stands, the prototypical borg-inspired pin action of the March cycle is reaching its conclusion. More importantly, once they're done with that funny business, hopefully the business as usual will take a turn for the better in Monday's search for a market-based follow-through day and other confirmation of better conditions at hand.
Index or Sector Proxy
S&P500 ETF (SPY)
Neutral / Neutral
138.05, 136.20 - 137.50
141.80 - 143
NASDAQ 100 (QQQQ)
Neutral / Neutral
41.75 â 42.25, 40.60, 39.40 - 40
43.25 â 44
Staff Writer & Options Strategist
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