Options Trading News

April 23, 2013  Tue 7:15 AM CT

The bullish momentum continues today as investors shrug off weak economic data and focus on strong corporate earnings.

S&P 500 futures are up about one-third of a percent and have been gaining in the last hour, while European indexes are surging 1 percent to 2 percent across the board. Most Asian bourses fell overnight after weak manufacturing data in China. European reports also missed expectations.

The main catalysts driving stocks higher this morning appear to be strong momentum in the S&P 500 and a series of positive corporate results. The index bounced at key its 50-day moving average on Thursday and has working its way higher since, while companies such as United Technologies, Netflix, and Travelers are climbing on strong results.

Semiconductors are also getting a shot in the arm after European chip giant ST Microelectronics said demand is improving and ARM Holdings beat expectations. The news could augur well for Intel, which has been climbing despite a weak report last week and is now back above its 200-day moving average for the first time since August.

Homebuilders could also be in focus today after Barclays upgraded the group, noting that home prices are climbing faster than expected. "Near term, the stocks should respond very positively to such a pricing dynamic," analyst Stephen Kim wrote, predicting "a wave of upward revisions to Street estimates." Builders also saw bullish option action yesterday.

Today's calendar keeps the focus on residential real estate, with the FHFA house price index due at 9 a.m. ET and new home sales an hour later.

Commodities and currencies are weak despite the gains in share prices. Oil is down by some 0.75 a percent, while copper and silver fell more than 1 percent. Agricultural products are also weak. The euro, Australian dollar, and Canadian dollar are falling as well, while the Japanese yen rallied across the board.

The strength in equities despite weakness in commodities and currencies is somewhat remarkable and seems to confirm the notion that a broader secular shift is underway in favor of stocks.

Amid individual companies, TRV rose 4 percent after the insurer's profit beat and its dividend was raised. NFLX is rocketing 24 percent amid strong growth of its online subscribers. ARMH is also indicated up 9 percent after top- and bottom-line results came in ahead of expectations. Ingersoll-Rand, however, dropped almost 4 percent on a weak profit outlook.
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