Chris Tyler, Optionetics.com
April 1, 2011

With plenty of jobs and fresh monies in hand, bulls march back to work to kick off Q2 on a high note. As of 11:10 ET the SP-500 (SPY) is up 0.70% as 2011’s April Fool’s day has been anything but a “joke on you” kinda session for those increasingly confident bulls.

Trust us when we say it could have been or could still always be different. In fact, it’s why after-the-fact headline and play-by-play descriptions of “sell the news” or the likes of “better-than-feared” reactions amongst investors continue to exist. Thus far however, fresh quarterly inflows and stronger-than-expected nonfarm and private payrolls have enjoyed the kind of straightforward and bullish investor response that isn’t always guaranteed to produce a layup or slam dunk.

By the now well-treaded numbers, the March nonfarm headcount increased by a better-than-expected 216,000 compared to views of 185,000. Private payrolls also bested estimates with its gain of 230,000 versus forecasts of 203,000. Unemployment dropped one-tenth of a percent to 8.8% and also promoted a grin for bulls expecting a flat reading of 8.9%.

Also on the economic front, slightly lesser and mixed reports haven’t prevented bulls from keeping their wallets in the open position during Q2’s Opening Day festivities. Across-the-pond, China’s PMI index for March rose 1.2 points with an expansion reading of 53.4. The increase marked the first gain in three months, though came in shy of forecasts.

Intraday and stateside, February construction spending data dropped by a much stiffer -1.4% versus the Street’s -0.7% estimate. Separately, national manufacturing conditions from the ISM showed mostly on par and flat results with a reading of 61.2 compared to views of 61.4.

And Richmond Fed Prez’ Jeff Lacker chatted with CNBC and voiced a “wouldn’t be surprised” confirmation for late Thursday’s Minneapolis Fed comments that the Fed funds rate may need to increase by 75bps later this year.

On the corporate side, talk of exchange operators ICE (ICE) and Nasdaq OMX (NDAQ) contemplating a rival for peer and in-play NYSE Euronext (NYX) has morphed into actual actions taken with a bid of $11.3B worth $42.50 per share and a premium of 19% over Deutsche Boerse’s existing offer.

Intraday, shares of NYX are up 11.15% within a seven week basing pattern. Shares of ICE aren’t acting so nice to bulls with its chilly -3.65% drop below neckline and 50SMA support. On the other slippery slight of hand, NDAQ is up 4.25% and back above 50SMA bear flag resistance.

And in sympathy and equally mixed, shares of CBOE (CBOE) are off -3.40% while putting together a faultier-looking handle and CME (CME) is up 1.25% and reclaiming the 50SMA as support for bulls.

In sector news, the semis (SMH) are continuing to fight the tape of the broader market. A relative strength leader through the first two months of 2011, the SMH is off -0.55% and still displaying a bear flag pattern against overhead 50SMA resistance.

Shares of index component Altera (ALTR) are under the largest percentage pressure at -2.00% but remain a leader on the daily chart for the sector. Separately, shares of Broadcom (BRCM) aren’t far behind with its losses of -1.75%, but the stock has put together more visible technical damage today in breaking below its 200SMA and consolidation support on heavier-than-normal volume.

Elsewhere and in those sometimes influential markets of notice, shares of the US Oil Fund (USO) are up about 1.00% and managing fresh marginal intermediate highs within its newly-formed and steeper uptrend.

Friday’s strength in black gold comes in response to today’s jobs report hinting of an improving economic recovery, which in turn needs to be lubricated by the commodity in order to keep those wheels of commerce motoring along.

Finally and in those sometimes accurate heat-seeking option markets, JDS Uniphase (JDSU) bulls appear to be pleading “Just Don’t Short Us” based on its above-average contract tally of 21,000, calls outpacing puts by a two-to-one margin compared to its 1.2 put/call average and a mixed bid on the session for its implieds.

Most active, both the April surrounding money calls and puts are seeing strong trading with the 20 call atop the leader board on volume of 3,900.

Shares of JDSU are off nearly -8.0%, putting its corrective program of late at about -35% within a bear flag pattern stationed below the 50SMA. News on the day, other than JDSU being a hedge fund favorite, is largely absent. Hopefully, being a favorite doesn’t preclude wearing another type of collar to work for Wall Street’s typically well-dressed sharks.

Chris Tyler
Senior Options Writer, former Market Maker & fulltime Option Hedge Hog Advocate
Optionetics.com ~ Your Options Education Site