OptionsHouse

Options Trading News

October 23, 2013  Wed 7:12 AM CT

SPX: SEE CHART GET CHAIN FIND STRATEGIES
Stocks are falling today amid worries about Chinese debts and as investors take profits following a string of winning sessions.

S&P 500 futures are down about two-thirds of a percent, matching declines of a similar magnitude in Europe. Shanghai fell 1.25 percent and Tokyo lost 2 percent. Commodities are down and the safe-haven Japanese yen is rallying.

The S&P 500 has climbed in nine of the last 10 sessions and has closed at new record highs every day since Thursday. Large amounts of cash on the sidelines, a modestly growing economy, and easy-money policies by the Federal Reserve have kept the money flowing into stocks.

Today's weakness comes after bad loans written off by Chinese banks tripled, spurring fears that defaults will increase going forward. Attention now turns to corporate earnings in the United States, with heavyweights including Caterpillar, Boeing, and Bristol-Myers Squibb issuing results.

CAT missed expectations by a wide margin, continuing a pattern of weakness, and is down 3.5 percent in early trading. BA is up 2 percent after surpassing consensus and raising guidance. BMY also beat but hasn't traded yet this morning.

Traders may also be watching the Nasdaq 100 and technology stocks after chip makers Broadcom and Altera cited weak mobile demand yesterday afternoon. High flyer Netflix.com also reversed sharply yesterday and closed down 9 percent despite a strong quarterly report. Investor Carl Icahn disclosed that he is selling 3 million shares of NFLX but still owns 4.5 percent of the company.

Another theme could be rotation into stocks that benefit from lower interest rates such as utilities and real-estate investment trusts. Both have outperformed the broader market in the last week following a long period of weakness. (See related story)

Worries about China are hitting oil, led by a 1.2 percent drop by West Texas Intermediate. Brent crude is only lower by a quarter percent. That price differential is potentially bullish for refiner stocks, which have also seen bullish option activity of late. Copper fell 1.4 percent and precious metals are down about 1 percent.

Foreign-exchange trading is following a similar pattern, with the euro, Australian dollar, and Canadian dollar are trading lower. The Japanese yen is up across the board, a classic pattern of risk aversion.
Share this article with your friends


Related Stories

SPX

Cramer: Possible signs of flash crash

January 23, 2015

The insanity and inanity of these market moves wrecks confidence and wants everyone to pay less for stocks--with the exception of the pure domestic plays.

SPX

Stocks hold gains after ECB move

January 23, 2015

S&P 500 futures are up 0.2 percent, while Germany and France led the winners across the Atlantic with gains of roughly 2 percent. Most Asian indexes rose about 1 percent in the overnight session.

SPX

Calendar is quiet before busy week

January 23, 2015

Today's calendar is relatively quiet, with attention potentially turning toward Greek elections this weekend. Existing home sales at 10 a.m. ET are the only U.S. data scheduled for release.

SPX

Futures rise on ECB stimulus hopes

January 22, 2015

S&P 500 futures are up 0.5 percent, while trading is mixed across the Atlantic. Higher-debt countries such as Italy and Spain gained, though Germany declined slightly.

SPX

ECB decision dominates calendar

January 22, 2015

The monetary-policy statement is due at 7:45 a.m. ET, followed by a press conference with ECB President Mario Draghi 45 minutes later.

Invest Like a Monster - Las Vegas: March 13-14

Premium Services

Free Webinar

Option Money Machine Winter Classic

Education & Strategy

Rolling in possibilities!

First of all, we want to wish everyone a happy, healthy, and prosperous New Year!  Our plan was to get...

View more education articles »