Catalysts Bulls May Look For

Cusick's Corner
Uncertainty -- the market is trading with little conviction and is below the 50-Day Moving Average, which means trading below mid-term support and looking a little uncertain. JPM is reporting earnings tomorrow and they could give a potential boost to the lagging Financials. Tech is already getting a boost in the After Hours with Riverbed (RVBD) reporting good earnings and upside guidance. These are the catalysts that the bulls need to have if there is going to be further upside in this current market. Watch the data out tomorrow with Retail Sales and the Crude Inventories due out pre market and early in the session tomorrow. The market wants to see Retail come in line. See you Midday

Stock market averages opened lower and never recovered Tuesday. The table was set for early weakness on Wall Street after equity markets fell across Asia and Europe amid worries about the Japanese nuclear crisis. The rating for the meltdown has been raised to 7 from 5, putting it on par with the 1986 Chernobyl disaster. Meanwhile, Alcoa (AA) lost 6 percent and was the Dow's biggest loser after the aluminum maker reported earnings that topped Street views, but revenues fell short of forecasts. On the economic front, data released Tuesday morning showed the nation's Trade Balance narrowing to $45.8 billion in February, from $47 billion in January and in-line with economist estimates. Commodities prices were also in focus after crude oil lost $3.94 to $105.98 a barrel and gold gave up $15.30 to $1,452.80 an ounce. Stocks were broadly lower as well and, at the closing bell, the Dow Jones Industrial Average had shed 117 points. The tech-heavy NASDAQ lost 26.7.

Bullish
Dr. Pepper Snapple (DPS) saw a day of relative strength and increasing call activity Tuesday. While the broader market floundered throughout the session, shares of the beverage maker finished the day up 52 cents to $38.67. 5,280 call options traded in the name, which compares to 376 puts and typical daily volume about 200 contracts. April 40 calls, which are 3.4 percent out-of-the-money and have just three days of life remaining, were the most actives. 3,220 traded. Open interest is just is 955 contracts and so the activity looks opening. May 40 calls were busy as well, with another 1,500 traded. There was takeover talk in the name. It's unsubstantiated market chatter, but probably explains why the stock made a run to $39.96 per share and investors were showing interest in the calls at the $40 strike.

Bullish trading was also seen in Colgate Palmolive (CL), Monsanto (MON), and Tyco International (TYC).

Bearish
Supervalu (SVU) puts were active today. Shares of the grocery chain gave up 9 cents to $9.11. Options volume was 2.5X the average daily, with about 12,000 puts and 3,000 calls traded in the name. January 5 puts, which are 45.1 percent out-of-the-money, were the most actives. 9,400 traded. Another 2,100 April 9 puts changed hands. Some investors might be taking positions in SVU puts on concerns about volatility around earnings. The company is due to report Thursday morning. Shares tumbled 11.6 percent after earnings were last reported on January 11.

Bearish flow also surfaced in Analog Devices (ADI), Applied Materials (AMAT), and Longtop Financial (LFT).

Index Trading
Trading volume picked up in the index market amid increasing volatility Tuesday and ahead of the options expiration at the end of the week. 593,000 calls and 684,000 puts traded across the S&P 500 Index (.SPX), CBOE Volatility Index (.VIX) and other cash index products. By way of comparison, 393,000 calls and 484,000 puts traded in the index products the day before. The market was a bit more volatile today and the investors stepped up demand for portfolio protection - i.e. buying index puts. However, the CBOE Volatility Index didn't move much. Although VIX, which tracks the expected volatility priced into S&P 500 puts, hit an intra-day high of 18.46, it settled the day up just .50 points. At 17.09, there is still little fear reflected in the market's "fear gauge".