Surprise! Todays economic data was supportive and the mixed bag on this morning’s earnings front was mildly supportive – due to lowered expectations of late. China’s overnight data was lukewarm and not enough to extend the impressive gains on the week as their GDP data was soft, showing another quarter of slowing growth, but industrial production and retail sales were decent. The Eurozone continues to march to the tune of several drummers, but with the backstop in place it appears there is less focus on the region lately as the dueling headlines have less effect on the markets. ECB Must Define Aid Conditions For Spain, Spain Official Tells WSJ = no bailout request yet… In the US, the early earnings reports were also mildly supportive, but the jobless claims disappointed by checking in much higher than expectations 388k vs exp. of 365k. Tick tock…..
Morning observations: I am telling ya – It was hard to miss this one… 11:40 PM Google’s (GOOG -8.4%) Q3 results are out early, and they missed estimates. EPS of $9.03 missed by $1.62, and revenue of $11.33B (+51% Y/Y, boosted by Motorola acquisition) missed by $530M. Shares were diving, down 8.5% and halted minutes later. As far as circuit breakers go on the Floor of the NYSE, all DJIA and S&P 500 stocks trigger a Volatility Trading Pause (VTP) on a 10% move in any 5 minute period. There has to be at least three trades above this threshold for the VTP to be triggered (a mandatory 300 second halt). All other stocks have a 30% VTP (except stocks under $1 which have a 50% VTP. *GOOGLE SAYS STOCK HALTED AS IT FINALIZES 8K EARNINGS DOCUMENT *GOOGLE SAYS 8K FILED WITHOUT AUTHORIZATION *GOOGLE SAYS RR DONNELLEY FILED DRAFT 8K EARNINGS W/O AUTHORITY.
Here is the 8K document http://xml.10kwizard.com/filing_raw.php?repo=tenk&ipage=8515399&ds=2
Anyone thinking about the expiration – posted by Jim M (12:33:22): based on Mondays close >SPY> Puts out-number calls 2.2-to-1.0 – about the same as last month. Call OI is highest between 144 & 152. Put OI is highest between 130 & 145. There’s some overlap at 144/145, and otherwise the call and put OI is split pretty well. A close right there (near unch) would cause the most number of total calls and puts to expire worthless. Today’s close was at 144.08, which right at the lower end of the small overlap range. Hence flat trading the rest of the week would do the trick; a slight move up would be fine too.. .
Even more from Jim – DIA Puts out-number calls 1.2-to-1.0 – less bearish than last month. Call OI is highest between 134 & 139. Put OI is at 126 & 128 and then is eerily steady between 129 & 137. There’s overlap between 134 & 137. Given that the call and put OI is nearly equal and the call OI is much greater within the overlap area than the put OI, a close in the lower half of the range would cause the most pain. Today’s close was at 134.02, right at the lower end of the range. If DIA closed here on Friday, some of those put buyers would make money at the expense of nearly all the call buyers losing. Flat trading would cause lots of pain, but a slight move up would cause a little more pain
U.S. Companies Trim Medium-Term Hiring Plans. Business Council Members Cut Growth Forecasts, Inflation Expectations. Business Council CEO Confidence Index 47.8 in Oct. vs 62.5 in May. The Business Council represents more than 100 U.S. CEOs
MTS chart: Only +75 HANDLES since FRI http://www.mrtopstep.com/mrtopstep-charts-major-inflection-stocks-to-bonds-spy-tlt-spz-1420/
Thursday started with 230k ESZ and 1.5k SPZ traded on Globex, trading range 1453.60 – 1458.10 / Wednesday’s RTH’s, pit session range was 1457.70 – 1448.50, settled at 1457.10 up 7.9 handles.
Today’s RTH’s gapped 4.5 handles lower to 1453.00- 1452.50 traded a low of 1450.80 and slowly stepped up to 1459.50 by 11:15CT. EUBIE (11:12:41): looks like we are in DISTRIBUTION PHASE of MKT / 1459 / 4 days after the CAPITULATION SELL 1420 / TLT $124.75 EUBIE (12:29:40): I’ll bet a nut that this 1459 area is IT ON THIS LEGG TODAY which was posted minutes before the surprise of the day. mts2 (11:36:24): *GOOGLE 3Q REV. EX TAC $11.33B, EST. $11.83B :GOOG US and a short sale restriction on goog went into effect and was halted by 11:51. The spoos went to trade new lows of 1447.70, briefly breaching yesterday’s low and clawing back up to retest the opening range. Google did not resume trading until 2:20CT so for the most part all was quiet through the afternoon as the spoos hovered around the opening range. The closing imbalance showed the broader market with a small $100M to the buy side. The cash close traded 1453 area before settling at 1451.50 down 5.6 handles on the day.