A rebound from Tuesday’s lows had stocks recover and rally yesterday with across the board gains, frustrating short sellers once again.
Tech turned higher, regaining losses in the NDX Nasdaq 100 index with a gain of 33 points (.8%) to close at 4095. Higher lows set the stage for a bounce as the 4050 level has repeatedly held as support.
Netflix is up 60% from the April 28th lows, posting new all-time highs on Tuesday. The close at $484 yesterday, with option activity in the weekly September 480 and 485 calls looking for more upside on the new long position.
The broad market SPX jumped back above the 1990 support level to close at 1996, a .3% percent gain. The measured move target stands at just below 2040, assuming a full “V” retracement back to the 2011 peak.
POT was in play, closing at $34.02 seeing a total of 19,000 September OTM $34.50 calls mostly bought at $.25. The open interest was only 210 contracts, showing a strong upside opinion with Potash up 3% YTD.
The rally in stock price saw an inverse fall in volatility, as per the norm, with the VIX down nearly 5%, giving back half of the big early week gains. After peaking above $14 for the first time since August 15th, the VIX closed at $12.88 down $.62.
The increased volatility during the session yesterday saw more than normal option volume with 566,000 contracts trade on 72% calls. The most active option was the September $18, trading 59,000 contracts.
Blue Chips added 55 points to 17,069, up .3%. The YTD performance is plus 3% in the DOW, dwarfing the NDX 14% and SPX 8% gains.
McDonalds posted new 52-week lows intraday at $90.53 to close at $93, up 2.1%, leading the index on the upside. The price movement resulted in 3.7x normal option activity trading 105,000 contracts on 65% calls.
Stocks to watch this morning include:
LULU Lemon is up 14% in pre-market trading, with better than expected earnings results and positive outlook. LULU is at $44 with the year low at $36
JDSU is up 13%, announcing it will split into two companies. JDSU shares had been down 15% over the last 52 weeks before the news.
RSH is bouncing pre-market as it tries to get a lifeline. Barron’s asks if the stock is “waving goodbye,” with bankruptcy reorganization likely in its online comments this morning.
Overseas markets have The Nikei in Japan up .75% to lead the day once again. Europe is in red with the FTSE down .4%, and the DAX in Germany is barely negative.
Stock index futures prices are steady with the Emini S&P minus 5 points. The Dow futures are 50 points lower here this morning, with an hour to go before the open of the cash stock market.