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TEN Exclusive: Options Update – 10/31/10

The Dow Jones Industrial Average and the other major indexes managed to lock in solid gains during the month of October, despite a lack of action last week as traders chose to wait until the mid-term elections and possible Fed stimulus this week pass.

Basically we spent the week in a wait and see pattern and we expect that Monday and possibly Tuesday will bring the same.  There is certainly an air of cautiousness in the markets now, but barring any major disappointments from the elections or the Fed, we suspect this rally will resume in some fashion.  We may not get a rip-roaring move higher immediately, but we think we will see a rally over the last two months of 2010.

It doesn’t make much sense to blindly take on risk here, ahead of two big market moving events this week.  However, we do think it makes sense to hold some calls on some sector leaders.

We remain bullish but prepared to change course quickly should the market be disappointed this week.  We expect to see the SPX test the 1200 level by the end of the week.

Weekly Economic Calendar:

Monday

  • The Commerce Department will report on personal income and spending construction spending in September, while the Institute for Supply Management (ISM) will issue its October manufacturing index. Allergan Inc. (AGN), Cooper Tire & Rubber Co. (CTB), Corning Incorporated (GLW), Humana Inc. (HUM), Intercontinental Exchange Inc. (ICE), Loews Corp. (L), American Financial Group (AFG), Anadarko Petroleum Corp. (APC), and Evergreen Solar Inc. (ESLR) will report earnings.

Tuesday

  • There no major economic reports scheduled for Tuesday, which is also election day. Archer Daniels Midland Co. (ADM), The Clorox Co. (CLX), DineEquity Inc. (DIN), Dollar Thrifty Automotive Group Inc. (DTG), Kellogg Company (K), Marathon Oil Corp. (MRO), MasterCard Inc. (MA), Newmont Mining Corp. (NEM), Pfizer Inc. (PFE), The St. Joe Company (JOE), Tenet Healthcare Corp. (THC), Teva Pharmaceutical Industries Ltd. (TEVA), Career Education Corp. (CECO), Hartford Financial Services (HIG), Leap Wireless International Inc. (LEAP), OpenTable Inc. (OPEN), STEC Inc. (STEC), and Wynn Resorts Limited (WYNN) are scheduled to issue their quarterly reports.

Wednesday

  • The big news on Wednesday will likely be the decision of the Federal Open Market Committee. It’s widely anticipated that the Fed will launch another round of quantitative easing. We’ll also get the ISM services index for October, reports on auto sales in October and factory orders in September, and the usual weekly report on U.S. petroleum supplies. ADP will weigh in with employment numbers in the private sector. Scheduled to report earnings are Aetna Inc. (AET), Agrium Inc. (AGU), Alpha Natural Resources Inc. (ANR), AOL Inc. (AOL), CVS Caremark Corp. (CVS), Hyatt Hotels Corp. (H), Molson Coors Brewing Co. (TAP), PulteGroup Inc. (PHM), Qwest Communications International Inc. (Q), Time Warner Inc. (TWX), TRW Automotive Holdings Corp. (TRW), WellPoint Inc. (WLP), Westlake Chemical Corp. (WLK), Force Protection Inc. (FRPT), Genco Shipping & Trading Limited (GNK), General Cable Corp. (BGC), Overstock.com Inc. (OSTK), Prudential Financial Inc. (PRU), QUALCOMM Inc. (QCOM), WebMD Health Corp. (WBMD), Whole Foods Market Inc. (WFMI), and Yamana Gold Inc. (AUY).

Thursday

  • The weekly initial jobless claims report comes out on Thursday. DIRECTV (DTV), Frontier Oil Corp. (FTO), Fuel Systems Solutions Inc. (FSYS), Liz Claiborne Inc. (LIZ), PG&E Corp. (PCG), Sirius XM Radio Inc. (SIRI), Suncor Energy Inc. (SU), Time Warner Cable Inc. (TWC), Activision Blizzard Inc. (ATVI), bebe stores inc. (BEBE), Blue Nile Inc. (NILE), CF Industries Holdings Inc. (CF), Crocs Inc. (CROX), Isis Pharmaceuticals Inc. (ISIS), Kraft Foods Inc. (KFT), SandRidge Energy Inc. (SD), and Starbucks Corp. (SBUX), will report earnings.

Friday

  • Nonfarm payrolls and the unemployment figures for October will be released on Friday. Beazer Homes USA Inc. (BZH), Coventry Health Care Inc. (CVH), DISH Network Corp. (DISH) and Plains Exploration & Production Co. (PXP) will report earnings.
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