Chris Tyler, Optionetics.com
January 18, 2011
One bad apple and dropped Anchor Banker nearly force bulls to take a temporary leave of absence Tuesday. As of 11:00 ET the SP-500 (SPY) is mostly flat, -0.10% and still keeping to technical-based resolutions to make 2011 a good one.
“Late, Late Breaking News!!” Steve Jobs, the man synonymous with Apple (AAPL), is taking a third medical leave of absence, putting shares under pressure in front of tonight’s earnings release. Intraday, shares of AAPL are off -3.75% but bouncing back from out-the-gate losses near -6.00% and confirming 30SMA technical support.
Analysts almost universally it seems expect Apple to easily beat Street views and the company’s own typically conservative top and bottom line forecasts just shy of consensus views calling for profits to jump by 46% and sales growth of roughly 105% on revenues of $24.4B.
Despite Apple preparing a “deep bench” due to prior health scares in 2004 and 2009 and Jobs announcing he will remain CEO while No.2 Tim Cook will handle the company’s day-to-day affairs; the fact remains that no company’s success in today’s market is so inextricably linked to one person, as is the case with Apple.
Through Apple’s innovation with key and sometimes it seems, consumer staple-like products such as the iPhone and iPad which have transcended the marketplace; shares of AAPL have gained nearly 65% over the past year, 335% since 2009 and in the process, muscled Apple into being the second largest company in the SP-500.
In other regularly-scheduled corporate news and kicking off this week’s crop of influential earnings releases, Anchor Banker Citigroup (C) is underwater by a rather deep -5.75% after disappointing or goading investors into profit-taking with its top and bottom-line miss.
By the numbers, Citigroup reported profits of $0.04 per share and just half of the $0.08 Street analysts had come to expect from the financial giant. Sales, while growing 133.1% year-over-year, also fell short of estimates of $20.4B with actual revenues of $18.37B.
Not helping matters, on call Citi’s management stated signs still point to a recovery but they remain wary of housing, labor market and sovereign debt headwinds.
On the Percentage Gainers board for the Naz’, shares of Vodafone (VOD) are up 4.70%. The wireless operator received a positive plug this weekend from Barron’s.
The weekly financial rag stated investors might look at purchasing shares due its 45% stake in Verizon’s (VZ) wireless unit while maintaining “healthier business and P/E of 9, well as of Friday—and compared to VZ’s P/E of 16” according to the publication and through the Reuters grapevine.
In the No.2 spot, , shares of Apple competitor RIM (RIMM) are up 1.15%, hitting their best levels in eight months and looking to improve on its four month long weekly uptrend from one of large cap tech’s unloved names in 2010. Shares appear to be benefitting from the lack of clarity at Apple and technically speaking; possibly a more tasty 2011 for bulls.
Elsewhere and keeping the bull alive for the broader market, investors have found support from a couple items from across-the-pond this morning. In the spotlight, Spain saw a second-straight “successful” debt auction following last week’s picked up and bandied about offering.
Separately, Germany announced better-than-expected results from its ZEW economic sentiment indicator which surged 11.1 points to 15.4. The data marks a six month high and easily trounced analyst views calling for a much slighter increase to 6.8. And rounding out Tuesday’s bullish storyline from overseas, Europe’s debt crisis received some positive support from Russia’s finance minister.
In those often intertwined markets of influence, support from sovereign fund sponsorship is helping the EUR/USD to a gain of 0.60% and allowing increased investor appetite for risk to attempt a multi-week breakout from its more dour technical doldrums.
Tied at the hip, many of those same and now less risk averse investors are pressuring the US Dollar (UUP) for a sixth straight session. With the currency proxy off -0.30%, the price action is attempting a breakdown of its previously bullish base lows.
Finally and in those sometimes accurate heat-seeking option markets, the solar sector (TAN, TSL, JKS and YGE) is seeing a bit of hot action appreciative of more than a few technically sizzling moves in Tuesday’s first half. In the bullish hot seat, shares of LDK Solar (LDK) which gave strong upside and above views guidance last week is up 9.00%.
Technically, LDK is breaking above its consolidation highs formed as a result of its announcement last Monday and working its way higher within the right side of its “reset” first stage cup-shaped base or a pattern other home-gamers might call a weekly uptrend still in motion and one receiving further confirmation.
Options prices in LDK remain mixed and range bound as we spoke of last week. The exception is the January contract whose ever diminutive vega factor has resulted in implieds jumping into the low triple digits. For traders buying into or selling into the 1,400 Jan 12.5 calls that have traded; counting the dollars and cents involved and looking to spread off that risk with its other highly-liquid options or stock makes enough sense and “cents” when given a peach rather than a bad apple.
Chris Tyler
Senior Staff Writer & Options Strategist
Optionetics.com ~ Your Options Education Site
