The Canary Chirped

Cusick's Corner

The market held its ground into the After Hours, but I did not see the thrust that I would give the bulls the total edge. Next week has the potential to be more volatile, with the EU rate decisions on the Thursday, looks like more tightening by the hawks looming, and the canary, Copper (JJG), started to chirp again, on concerns of potentially slower growth in China. While this might be a little contrarian to my discussions of looking at emerging markets form the Midday, it should be taken more as a caution flag against complacency. We start the month of April out on the right foot but we need to stay disciplined. Have a good weekend and I will see you Midday.

Strong jobs numbers helped lift stock market averages on April 1. Before the opening bell, the Labor Department reported that the US economy added 216,000 payrolls in March. Economists were looking for an increase of about 185,000 new jobs. The unemployment rate eased to 8.8 percent. Economists were looking for the rate of unemployed to hold steady at 8.9 percent. Other data showed the ISM manufacturing index down to 61.2 in March, from 61.4 in February and in-line with expectations. Construction spending declined by 1.4 percent in February, however, which was twice as bad as expected. But the jobs numbers overshadowed the day's other economic data. The stock news was mostly upbeat as well. A merger was announced after NASDAQ OMX Group (NDAQ) and InterContinental Exchange (ICE) said they're teaming up to bid for NYSE Euronext (NYX). Ford (F) and GM shares rose on monthly auto and truck sales numbers. A bullish underlying tone continues. The Dow Jones Industrial Average gained 57 points and the tech-heavy NASDAQ added 9.5.

Bullish
NetApp (NTAP), a Sunnyvale, California storage device manufacturer, saw brisk trading today. Shares didn't do much and finished the day up a nickel to $48.20. Meanwhile, options activity was interesting, as about 21,000 calls and 7,000 puts traded in the name, a ratio of three-to-one. The top trade surfaced in morning action after a block of 5,500 June 60 calls traded at 38 cents on the International Securities Exchange [ISE]. Sentiment data from the exchange indicate that an investor bought-to-open the position. 11,200 contracts June 60 calls changed hands on the day. The contract is 24.5 percent out-of-the-money and some investors might be taking positions on hopes for a rebound in NTAP through mid-June. Shares touched a 52-week high of $61.02 on February 11, but then came under fire after earnings were reported one week later.

Bullish trading was also seen in Ford Motor (F), Avalon Rare Metals (AVL), and GM

Bearish

Boston Scientific (BSX) saw increasing options activity today. Shares of the medical device maker added 11 cents to $7.30 and options volume rose to 4X the average daily. Most of the activity was on the put side of the options chain. 15,000 contracts traded (compared to 1,960 call options). May 7 puts were the most actives. 7,530 changed hands. April 7 and 8 puts were busy as well. In addition, 93 percent of the total put volume in BSX traded at the ask-side of the bid-ask spread, according to data from web site WhatsTrading.com. So, it appears that put buyers were driving the action and perhaps bracing for volatility in the stock heading into a conference presentation scheduled for Monday.

Bearish flow also surfaced in Clinical Data (CLDA), H&R Block (HRB), and Corning (GLW)

Index Trading

Trading volume picked up a bit, but it was a very quiet week of trading in the index market overall. 514,000 calls and 765,000 puts traded across the S&P 500 Index (.SPX) and other cash indexes today. The S&P 500 added 6.58 points to 1,332.31and the most active index option was the SPX May 1,250 put, which traded more than 30,000 contracts. Meanwhile, the CBOE Volatility Index (.VIX) lost another .34 to 17.40 and is now down 40.8 percent since March 16. The top options trades in the VIX was an April 27.5 - June 24 put spread, which was sold at $4.07, 20000X. It probably rolls a bearish position in the VIX from the April in-the-money puts to June ITM puts.

ETF Action
SPDR Financial Fund (XLF) added 14 cents to $16.53 and some investors seem to be expecting additional strength in the exchange-traded fund over the next two weeks. April 17 calls, which are 47 cents or 2.8 percent out-of-the-money, were actively traded. Total volume topped 100,000 contracts and included 20,000-contract blocks traded at 8 and 10 cents on the ISE, which were opening buyers, according to ISEE data. 60,000 XLF calls were bought-to-open today on the ISE, as some investors seem to be expecting a rally in the financials before the April expiration, which is in two weeks. XLF is the exchange-traded fund that holds all of the financial-related names from the S&P 500.