As Markets Snooze, Money Tree Begins To Shake. (NYSE:SPY), (NYSE:WMT), (NYSE:HPQ)

The markets continue to be held in check as the dollar stays slightly higher. The general bullish sentiment of late 2009 is back with a flurry as the markets have rallied off the DOW 10,000.  While economic news this morning was ugly to say the least, stocks continue to be held in check.  Options expiration? Most likely.  With big institutions all about controlling stocks and indexes into options expiration to maximize profit, the markets often act strangely. What do I mean?  Simply put, as a pure example, if an institution sells 1 billion net premium dollars in SPDR S&P 500 ETF (NYSE: SPY) puts at $110.00, you better believe they have a major incentive to keep or get the SPY above $110.00 for options expiration.  As long as it closes above, the institution will profit by those put options expiring worthless.  Think this does not happen on the markets or on individual stocks? Think again!

In any case, the economic data today was ugly.  The PPI data came in extremely hot with a jump of 1.4%.  This shows us that on the producer level, inflation surged.  The key will be to watch the CPI data tomorrow to see if it was at all passed through to the consumer.  In addition, jobless claims rose to an unexpected 473,000.  Expectations had been for a number below 450,000.  Much worse than expected.

On the earnings front it was a mixed bag in regards to stock reaction.  Yesterday, after the close, Hewlett-Packard Company (NYSE: HPQ) reported earnings that beat Wall Streets estimates.  Net income rose over 25% as they reported net earnings per share of $0.96.  HPQ is higher by .3% today.  This morning, Wal-Mart Stores, Inc. (NYSE: WMT) reported earnings that also beat Wall Street estimates.  However, the outlook was dampened slightly.  The stock has sold off slightly, down 1.4%.

Remember, options expiration is a shady time for the markets when billions if not trillions of dollars are on the line.  Be ready next week for a wild time after the stopper on the markets are removed.

Gareth Soloway
Chief Market Strategist
InTheMoneyStocks.com