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TFC Commodity Trading Forum

Wall Street's Friday Lunch Options

Chris Tyler, Optionetics.com
January 21, 2011

A couple “goog” earnings reports, a test of the 20SMA and its back to business for a still uncorrected bull. As of 11:10 the SP-500 (SPY) is up 0.50% on technical-based resolutions to make 2011 a good after one plus days of “sell-e-brating.”

With Brazilian and China rate hike / inflation fears now old news and smartly discounted by bulls and “F5 (FFIV) Who?” a quieter part of the charting landscape, investors have been left to rally around better-than-expected results from General Electric (GE) and Google (GOOG).

By the numbers, GE has brought good things to shareholders by announcing a four cent profit beat on earnings of $0.42 per share. Sales grew by a very slight 0.8% year-over-year but also exceeded Street views on revenues of $41.4B vs. $39.9B.

Much to bulls collective delight and largely responsible for sending shares up 5.50% for a test of its April highs, management beefed up its FY11 outlook. The company now sees sales growth of 0.00% - 5.00% or an estimated revenue range of $150.2 - $157.7B compared to Street forecasts of $144.3B.

Less “goog” intraday with traders but lending a strong helping hand for Friday’s out-the-gate reasons to “Buy, Buy, Buy!!”, internet search goliath Google (GOOG) beat handily on both its top and bottom-lines. For its fourth quarter the company managed earnings of $8.75 per share versus estimates of $8.09 on stronger than expected sales growth of 28.6% equating to revenues of $6.37B.

Google also reported its Q3 “Paid Clicks” grew 18% year-over-year versus forecasts of about 15%. The company also announced some changes at the upper echelon of its food chain. In this case the three-way shake-up of CEO and its Executive Chair has most analysts’ approval as a strong move to more effectively continue Google’s global market reach.

Intraday and despite seemingly all-around good news (sans guidance) and a couple target lifts to $700 and even $800 a share, investors are suggesting “Not goog enough.” Currently, shares are mostly flat near 627 after reaching as high as 641.73 and back below that sometimes coveted “proper buy point” of 630.95.

Lastly on the earnings front, shares of Anchor Banker BofA (BAC) are producing a bit of drag on bulls tails Friday as it trades lower by -1.50%. The financial heavyweight missed profit views by a rather large ten cents on actual earnings of $0.04 per share and lighter-than-expected revenues of $22.67B vs. $24.87B.

On CNBC this morning, BofA’s CEO was on administering damage control by saying its Q4 results aren’t the “kitchen sink” they appear to be. According to the optimistic spin, the quarter did the job of essentially cleaning up the company’s issues with government sponsored enterprises.

Elsewhere and in those often intertwined markets of influence or notice at least, shares of the SPDR Gold Trust ETF (GLD) are striking marginal fresh one-plus month lows from a well-discussed (well, on these pages at least) topping pattern.

Shares of GLD are off fractionally by -0.20% despite a weaker US Dollar (UUP), down -0.70%, which at “select” times is purported to make a difference due to currency finagling thingamajigs’ and yesterday’s heated global economic trader talk.

Finally and in those sometimes accurate heat-seeking option markets, its Expiration Friday so there’s more than a bit of unusually heavy action. However, one spot that might be deserved of both bulls and bears attention beyond the January contract is Oracle (ORCL). Without splitting hairs over who’s in control technically, splitting strikes as a hedge hog might do with a long strangle and as discussed in today’s Outside The Box: Splitting Strikes Not Hairs in Oracle is thought worth reading in-between pouring through today’s technical tea leaves.

Chris Tyler
Senior Staff Writer & Options Strategist
Optionetics.com ~ Your Options Education Site