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Bullish cheer from Michigan to Chicago

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Economic data released from the February revised University of Michigan Sentiment and February Chicago PMI has given a lift to stocks as many of the major indexes challenge their WEEKLY pivots.

The revised February University of Michigan Sentiment for February came in at 79.9, which was slightly higher than the previously reported 79.2 and was an upside to economist's forecast of 79.2. February's 79.9 was below January's 82.4, but was viewed as a modest decline when compared to the Conference Board's steeper decline to 64.0 from 78.8. The smaller decline in the Michigan Sentiment gives hope to economic bulls that the Conference Board's number was an aberration.

Stock began moving near their highs of the session, then jumped higher still as the Chicago Purchasing Managers Index was released. Manufacturing activity in the Chicago area fell in February to 54.9 from 56.0 in January, but February's 54.9 reading was well above economist's forecast for 52.5. Levels above 50.0 signal expansion while levels below 50.0 are interpreted as contraction. New orders improved to 59 in February from January's 58, while the employment component edged up to 46.6 from 45.6 a month earlier. The prices paid component was 62.4 versus January's 63.1, while production nudged higher to 54.9 from January's 54.2.

Technology sectors have seen the greatest benefit from today's economic data, with the NASDAQ-100 Index (NDX.X) 1,013 +1.84% jumping nearly 13-points after the above economic data was released. The Semiconductor Index (SOX.X) 296.80 +2.49% is today's leading sector gainer as it attempts to clear a trending lower 50-day SMA of 294 and reclaim the psychological 300 level.

The broader S&P 500 Index (SPX.X) 846.11 +1.05% has seen a session best of 847 and holds those levels. Today's trade has the SPX reclaiming its weekly pivot of 844.20 and has the SPX making a firm move above its falling shorter-term 21-day SMA. Per last night's Index Trader's Wrap, I would strongly suggest FULL position bears in the SPX look to reduce some bearish exposure near-term.

The Dow Industrials (INDU) 7,941 +0.71% currently holds a 57- point gain, and is the only major index that has not traded its WEEKLY pivot of 7,982.80. Twenty-five of the thirty components register a gain with McDonald's (NYSE:MCD) $13.65 +3.01% and Hewlett Packard (NYSE:HPQ) $15.99 +2.96% leading gains, while Procter and Gamble (NYSE:PG) $82.31 and AT&T (NYSE:T) $18.56 -0.32% trade weak.

While today's economic data has given a boost to equities, Treasuries currently change near unchanged levels. This near- term DIVERGENCE between stocks and Treasuries has the bullish equity side of me still very cautious as I would have certainly thought strong economic data would have brought in some sellers to the bond markets and that just isn't taking place at this point.

On no news that I can find, shares of Yahoo! Inc. (NASDAQ:YHOO) $20.79 +3.53% have made a notable new 52-week high in the NASDAQ. The point and figure chart has been bullish since giving a double-top buy signal at $11.50 in early October and then breaking its bearish resistance trend of $13 soon after. The recent bullish triangle at $18.50 and a longer-term bullish vertical count of $33.50 has the stock looking very strong for a longer-term call option trader. I like a partial position in the YHOO July $20 calls (YHZGD) $3.30 here, and would look to add to position on any pullback into the $19 level.

Jeff Bailey

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