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

ISM manufacturing leads agenda

September 1, 2015

The Institute for Supply Management's manufacturing index at 10 a.m. ET is the main item. Economists forecast a reading of 52.6, down from 52.7 in July.

SPX

Stocks lower following big bounce

August 31, 2015

S&P 500 futures are down 0.6 percent but have cut their losses in half. Most of Europe has fallen about half a percent. Asia was mixed, with Tokyo and Singapore down about 1 percent.

SPX

Chicago PMI kicks off busy week

August 31, 2015

Today's main event is the Chicago Purchasing Managers Index at 9:45 a.m. ET. The Dallas branch of the Federal Reserve follows with its regional index at 10:30 a.m. ET.

SPX

Stocks retreat following big surge

August 28, 2015

S&P 500 futures are down 0.7 percent, matching the declines in Europe. Asian markets were positive overnight, with Shanghai rallying 5 percent and Tokyo up 3 percent.

SPX

European, spending data on tap

August 28, 2015

European indexes covering the industrial, business, and consumer sectors are due early in the session and could have some impact on trading.

OptionsHouse

Premium Services

Archived Webinar

Education & Strategy

Options Academy: Ron's Risk Calculation--A Real Life Example

It is rare that I get a chance to give a real-life, real-time example in my articles that the readers were not only following but were actually involved in at the time the event is happening. Well, that is where we are right now in our QQQ trade from last week. Let's recap the trade itself.

View more education articles »