Sentiment
Stocks overcame early losses and are trading mixed late Friday. The technology sector is showing relative strength after Intel (INTC) raised its third quarter revenue forecast and Dell Computer (DELL) posted quarterly earnings that beat Street estimates.
Meanwhile, the day's economic news held no unpleasant surprises. A report released before the start of trading in New York showed personal spending increasing by .2 percent in July, which was in-line with economist estimates. Incomes were unchanged, compared to expectations for a .1 percent increase. The PCE index, a gauge of inflation, edged up just .1 percent.
A bit later, the University of Michigan reported that its index of consumer sentiment improved to 65.7 at the end of August, up from an initial reading of 63.2 and better than the 64 economists had expected.
Trading is cautious despite the gains in the tech sector and the better-than-expected sentiment data. With less than an hour left to trade, the NASDAQ is up four, but the Dow Jones Industrial Average is down 40 points. The CBOE Volatility Index (.VIX) is up .12 to 24.80. Trading in the options market is slowing ahead of the weekend. Approximately 5.3 million puts and 6 million calls traded so far (a ratio of .88, compared to a 22-day average of .79.)
Bullish Flow
Trina Solar (TSL) is up 86 cents to $27.75 and some players looking for more upside in Oct 30 calls, with 4,970 traded, compared to existing open interest of 810. 6125 calls traded total, compared to 520 puts. ISEE data at 61 percent (=1061) opening customer call buyers. Implied volatility (average) is up to 70, from about 68 yesterday.
Advanced Micro (AMD) is up 23 cents to $4.46 and calls are actively traded after rival Intel (INTC) raised its third quarter revenue guidance to $9 billion from $8.5 billion. 57K calls traded on AMD today, or about 7X the typical amount. Sep, Oct, Jan10 calls at the $5 strike are the most actives, with more than 60 percent trading ask-side. Looks like buyers are dominating the flow and looking for a move beyond $5 in the weeks and months ahead.
Bearish Flow
Allos Therapeutics (ALTH) implied volatility is elevated ahead of am FDA advisory panel review of the company's lymphoma drug next Wednesday. Shares are down 60 cents to $7.17 in active trading today after reviewers "raised questions about the findings from Allos Therapeutics for a proposed lymphoma drug" — Reuters (Link to article). Shares are down and trading in the options market is brisk, with some players possibly buying Sep 2.5 - 5 put spreads ahead of the decision.
Implied Volatility Movers
VIX is up .78 to 25.46 and making a run to session highs midday, as the S&P 500 falls 7.8 to 1023.18 and session lows. Not hearing anything specific for the decline, but note that 1) After today, 1 trading day remains in August and angst might be higher ahead of the historically volatile months of Sept and Oct, 2) the economic calendar is busy next week, including key jobs data Wednesday through Friday, 3) things still haven't settled down in China, with the Shanghai down 3 percent overnight and down 15.6 percent since Aug 4.
Implied volatility is also higher in Allos Therapeutics (ALTH), EBAY, and AMD. Meanwhile, implied volatility is easing in Tiffany (TIF), Sirius Satellite (SIRI), and DELL.
