Trader Talk — 6/27/2012

| June 27, 2012 | 0 Comments More



Stock market averages are holding gains with help from economic data Wednesday. A report on Durable Goods was up 1.1 percent in May and .6 percent better-than-expected. Later, Pending Home Sales showed a surprise jump to 5.9 percent and much better than the .5 percent that was expected. Meanwhile, Italy’s MIB Index is up 2.5 percent and pacing a broad advance across the Eurozone ahead of a two-day summit among EU members. But the euro slipped .2 percent to 1.247 against the buck. Still, crude oil has added $1.04 to $80.4 following weekly inventory data. Gold is unchanged at $1675 an ounce. The Dow Jones Industrial Average is up 82 points and the tech-heavy NASDAQ has added 10 points. CBOE Volatility Index (.VIX) is up .03 to 19.75 amid a third day of very light volume in the options market. 1.6 million calls and 1.7 million puts traded so far (through 10:50 ET).

News and Notes
Surprise! May Pending Home Sales +5.9% vs. 0.5% consensus
Durable Goods: +1.1% vs. .5% consensus
Last Three Days of the Quarter
SPX Put Premium at 5-Year Highs: Concern the weakening U.S. recovery and Europe’s debt crisis will snuff out earnings growth has sent the cost of protecting against losses in the Standard & Poor’s 500 Index to a five-year high. Puts protecting against a 10 percent decline in the benchmark gauge for American equities cost 1.73 times more than calls betting on a 10 percent gain. – Bloomberg
Eurogroup says Cyprus to receive funds from either EFSF or ESM – Briefing
Today starts T+3. This usually means the markets go up, but the problem is any bad headline will knock the markets lower. Overall we still think down, but we cannot rule out a further short covering rally. It’s very basic: as more traders step back and trade less, the markets tend to drift higher. Recently the SPU has made a string of lower highs above 1300, but the SPU has also made a series of lower lows, meaning the ranges are contracting. We think it’s time to trade less and pick your spots better. That said, we lean to seeing higher prices today and tomorrow. As always, please keep an eye on the 10-handle rule and don’t forget to use stops – Mr. Top Step

Movers
Symbol Last Change %Change StdDevs
ENTR 5.21 +1.13 +27.7% 7.82
OMER 10.92 -2.33 -17.6% 5.61
GEVO 7.29 -1.48 -16.9% 2.20
ORLY 80.59 -15.85 -16.4% 8.78
PSDV 2.56 +0.31 +13.8% 2.38
LORL 65.61 +7.87 +13.6% 11.41
ATPG 3.31 +0.36 +12.2% 1.34
AMRN 14.70 +1.54 +11.7% 3.63
UIS 17.33 +1.57 +10.0% 2.89
ALXA 3.88 -0.41 -9.6% 0.86


Shakers (Implied volatility Movers)
HTS 11.5% -4.6
HRB 31.6% -9.8
ORLY 32.4% +5.9
FDO 40.6% +7.0
BUD 23.7% +3.7
CMG 36.4% +5.0
STZ 55.2% +7.5
LNCR 40.5% +5.3
LEN 43.5% -7.6
GIS 13.0% -2.3

52-week Highs
51 new highs: ACIW ADS ALXN AMRN AUXL BF/B BIIB BRLI CAMP CBM CHD CSGP CTFO DDD DG DIS DVA GPRO HNP HOMB HW ISIS KOF LEE LNDC MDC MNR MTH MWIV N NWS NWSA OSIR PNM PRGO QSFT RAI RYL SBAC SEM SIX SMBL SPF SRDX STR TCAP TWTC UMBF UNF WEC WTR

52-week Lows
43 new lows: APKT ASX ATML AWC BJRI CAGC CBAK CEL CERP CS CVVT DMND DQ EGI ENVI EXM FWLT GGS GROW GTI JAG JKS KEG KV/A MSPD MTZ MXWL MY NRP OXGN PMFG PWE QSII RIC SSN SVNT TC TSYS TTWO ULTR VTUS WTW XRA

Notable Flow
RRD – Bullish flow detected in RR Donnelley and Sons Company with 2245 calls trading, or 2x the recent avg daily call volume in the name. Shares near $11.55 (0.31) with ATMIV lifting by 1.70 point and 84% of todays call premium trading offer side — (Trade-Alert) 10:21
STZ – Bearish activity detected in Constellation Brands with 7046 puts trading, or 16x the recent avg daily put volume in the name. Shares near $22.01 (-0.18) with ATMIV lifting by 5.71 point and 97% of todays put premium trading offer side — (Trade-Alert) 10:11
As of 10:31ET, option volume exceeding the normal time-weighted level is noted in the following stocks: BUD, STZ, ORLY, ACAS, FDO, HRB, AMRN, CTXS, LEN – Trade Alert – 10:31
Over the first hour 129998 contracts have traded in SPX today, 1.16x the recent hourly average, with 51845 calls and 78153 puts trading as the index trades near $1330.99 (11). Front term atm implied vols are near 17.8% and the CBOE VIX is currently near 19.66 (-0.06) – Trade Alert – 10:31

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Category: Market Update

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About the Author (Author Profile)

Frederic Ruffy is a well-known trader, writer, and strategist who has spent years educating investors and creating intelligent, insightful, unbiased market observations that are frequently cited by the Wall Street Journal and other financial publications. As senior analyst, Fred provides frequent and regular notes and daily updates for activity of interest.

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