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Stock Market News Update
Friday, August 20, 2010



SOME Recommendations Performance
August 20, 2010

Success is simple. Do what's right, the right way, at the right time.

Another great week has been had, due to the continued volatility of the market, for recommendations, therefore profits have grown accordingly. As the market has improved we have been able to capitalize on this situation, although the increase again on Friday did hinder us slightly, and members who followed these recommendations for the past week were able to enjoy a 330% gain.

options action



Here are the gains on some of the stock options recommended by SOME during the last week:-

Amgen, Inc. (AMGN)………….24%

Gilead Sciences, Inc. (GILD…………….25%

Barclays PLC (BCS)………….10%

Capital One Financial Corp. (COF)…………….17%

Deere & Company (DE)…………….21%

Apollo Group (APOL)…………….17%

NetApp (NTAP)…………….31%

Dell Inc. (DELL).…………….18%

salesforce.com, inc. (CRM)……………13%

GT Solar International, Inc. (SOLR)………….15%

Abercrombie & Fitch Co. (ANF)…………….23%

Target Corporation (TGT)…………32%

United States Steel Corporation (X)……………62%

AMR Corporation (AMR)……………16%

Target Corporation (TGT)……………24%

Cameron International Corporation (CAM)………….19%

Congratulations on a great week and let’s keep the profits rolling! If you are not already a member of Stock Options Made Easy, then you may wish to become one so that you can benefit from the profits that are being generated!



friday update

Friday saw the stock market end mostly lower as investors continued to react to the week's downbeat economic reports that have raised concern about a double-dip recession.

Weighed down by a lack of news and the difficult economic data from yesterday, stocks lost ground for a second day of trading.

After Thursday's onslaught of negative data, traders were desperately seeking some kind of bullish catalyst today. But with no major economic reports on the docket -- and a decidedly mixed bag of earnings from tech-sector players Dell (DELL) and Hewlett-Packard (HPQ) -- investors seemed reluctant to leave money on the table over the weekend. As a result, the bears took control right out of the gate, with energy stocks pacing the decliners amid ongoing concerns about the pace of the U.S. economic recovery. However, given a general lack of market-moving developments, it seems that even the bears lacked the courage of their convictions today. Stocks drifted gradually higher throughout the afternoon, and the slow-and-steady push helped the Nasdaq Composite, at least, end the week on positive ground.

After climbing earlier this week, stocks remained solidly in reverse for a second day following the disappointing economic data on initial jobless claims and the Philadelphia Fed activity index that was released Thursday. Yesterday's data was the main driver of the Dow's 140-point loss and again with today’s 50-point loss.

"The market has called time out for any advancement in the value of stocks for the time being," said David Buik with BGC Partners in London in an e-mail.

"We're not seeing any significant growth prospects," said Peter Costa, president of Empire Executions. "Why be in the market if there's no (near-term) prospects for growth?"

"We're probably on a continuation from yesterday's disturbing claims number," said Paul Zemsky, head of asset allocation at ING Investment Management. "There's really nothing to hang your hat on."

Results for Major Market Indexes

The Dow Jones Industrial Average (DJIA – 10,213.62) finished the day, with a loss of 57.59 points, or 0.56%.

dow-aug20,2010



sp500-aug20,2010

The S&P 500 Index (SPX – 1,071.69) also had a loss, on the day, of 3.94 points, or 0.37%.



comp-aug20,2010

The Nasdaq Composite (COMP – 2,179.76), one-upped the other major indexes, with a gain of 0.81 points, or 0.04%.



The Russell 2000 Index of smaller companies had a loss of 0.18 points, or 0.03%, to settle at 610.78.

The Nasdaq fared better than the other indexes to end a hair higher after positive forecasts from Marvell Technology Group Ltd (MRVL) and Intuit Inc (INTU) drove their shares up.

Investors did not embrace all tech shares.Hewlett-Packard Co (HPQ) was among the biggest drags on the Dow after several brokerages cut their price targets on the computer maker's shares due to concern about demand for tech products. HP fell 2.2 percent at $39.85.

Components with significant overseas exposure weakened after the euro touched a one-month low following a European Central Bank official's suggestion that monetary policy should remain loose until next year.

Caterpillar Inc. (CAT) shares fell 0.6%, General Electric Co. (GE) shed 1.4% and manufacturing giant 3M Co. (MMM) slid 1.4%.

By the close of the Week:

The Dow Jones Industrial Average (DJIA) ended the week down by 0.9%.

The S&P 500 Index (SPX) ended down 0.7% for the week.

Meanwhile, the Nasdaq Composite (COMP) finished the week, the better of the three major indexes, with a gain of 0.3%.

Trading volume:

Traders' vacations have left volume exceptionally low this month. The uncertainty about the economy has made those who are working hesitant to make any big moves.

baby bear

Volume was tepid through the week and about 6.93 billion shares traded on the New York Stock Exchange, the American Stock Exchange and Nasdaq on Friday. This was well below last year's estimated daily average of 9.65 billion.

Declining stocks slightly outnumbered advancing ones on the NYSE by 1,721 to 1,230, while on the Nasdaq, decliners beat advancers 1,308 to 1,272.

Notes of Interest….

The Dow Jones Industrial Average’s (DJIA) ended beneath its 10-week moving average for the first time since July 16.

The S&P 500 Index (SPX) notched a second consecutive weekly close beneath its 10-week trendline. However, the SPX is still perched above support at 1,070.

Nasdaq Composite (COMP) found intraday support at 2,160.

Crude futures for September delivery ended its run as the front-month contract on a negative note. With no new developments to distract traders from Thursday's bleak reports on employment and manufacturing, black gold was pummeled on fears of anemic energy demand. September-dated crude oil closed on a loss of 97 cents, or 1.3%, at $73.46 per barrel. On a weekly basis, crude futures shed 2.6%.

Gold futures endured a modest daily decline due to strength in the U.S. dollar -- but the malleable metal's reputation as a safe-haven investment helped keep losses to a minimum. By the close, gold for December delivery was down $6.60, or 0.5%, at $1,228.80 per ounce. For the week, gold eked out a slim gain of 1%.

Bonds: Prices for Treasurys dipped in afternoon trading, sending the yield on the 10-year note up to 2.61% from 2.57% late Thursday.

The CBOE Volatility index (VIX), Wall Street's fear gauge, was expected to stay below 25, suggesting a relatively calm market. The index closed down 3.6 percent.

GOLD

Gold prices have come roaring back in the past few weeks and are once again getting close to hitting a new all-time high. Prices were down a bit Friday. But at about $1,230 an ounce, they are still up more than 5% in the past few weeks.

The yellow precious metal rose to an intra-day peak of about $1,265 an ounce back in mid-June -- the height of the fears about the sovereign debt crisis facing Europe's PIIGS.

Reasons for Gold Price Increases

1/ Gold prices can, at times, be tied to inflation expectations.

2/The price of gold often spikes at times of fear. And with more and more concerns about how the economic recovery in the United States is losing steam, investor nervousness appears to be the most likely reason for gold's recent move higher.

"It's the mirror image of what's going on with stocks. The only thing that we're certain of is uncertainty and gold benefits from that," said Richard Ross, global technical strategist with Auerbach Grayson, a broker dealer in New York.

3/Gold is undoubtedly a momentum play. With compelling reasons to avoid stocks, fears that the Treasury market may be a bubble, and concerns about both the state of the dollar and euro, gold could keep climbing.

Brian Hicks, co-manager of the U.S. Global Investors Global Resources fund in San Antonio, said gold could hit $1,300 by the end of the year and $1,500 sometime in 2011.

gold chart



4/ Gold does well when people are worried about deflation. Hicks said that even though it may seem counterintuitive for gold to do well when people are worried about deflation, he thinks that some longer-term investors are still concerned about the potential for inflation at some point down the road. And that could push gold higher.

"Gold has been resilient in the face of a lot of discussion about deflation. But people are also discussing what the possible cure for deflation will be," Hicks said. "That could be an expansion of government deficits and excessive printing of money. That would debase the dollar and fuel eventual fears of inflation."

Keith Springer, president of Capital Financial Advisory Services, in Sacramento, Calif., agreed. He said gold could spike to between $1,400 and $1,500 next year.

"Gold is acting like a third currency, a crisis currency. Right now, you can buy it for deflation or inflation fears," he said.

5/ Hedge-fund buying….

Ross said the run-up may also have been sparked by the fact that several well-known hedge fund managers, including John Paulson, Eric Mindich of Eton Capital, George Soros and David Einhorn, have disclosed investments in various gold-related assets, such as miners and exchange-traded funds tied to gold bullion.

"There's a dream team of investors that appear to be backing gold," Ross said.

But Ross warned that following the lead of the so-called smart money is risky. For one, it's tough to know for certain how big a hedge fund's positions are in gold since many funds often make quick moves in and out of investments.

Economic Concerns



unemployment

State Unemployment

State unemployment turned gloomier in July, with jobless rates rising in 14 states and remaining unchanged in another 18. But 18 states and the District of Columbia saw a decrease in their unemployment rates, according to the Labor Department's monthly report on state unemployment.

The state unemployment picture was slightly worse than in June, when jobless rates eased in more than half of all U.S. states for a third straight month and only five states reported jobless rate increases.

Nationwide, the unemployment rate remained stuck at 9.5 percent in July.

The report suggests many states are seeing less improvement in the job market than earlier this year. But there were positive signs that indicate the recovery hasn't stalled out.

Thirty-seven states saw job gains in July, an improvement from June but below the 41 states that gained jobs in May. That occurred even as many states lost temporary census jobs. Overall, 143,000 census jobs across the country ended in July. Private employers, meanwhile, added 71,000 jobs last month. Job market improvement "is slow, but it's still moving in the right direction," said Steve Cochrane, an economist at Moody's Analytics.

There were some bright spots in the Northeast. New York and Massachusetts reported strong job gains. Massachusetts added 19,200 private-sector jobs, the largest monthly gain in more than 20 years.

The increases in Massachusetts were broad-based. They included 6,100 new jobs in hotels and restaurants, 1,600 additional jobs in retail and 2,800 new jobs in manufacturing.

The state was one of the first to see its housing sector slump, Cochrane said, and may now be exiting the downturn earlier than other states. Still, Massachusetts' unemployment rate was 9 percent in July, the same as in June.

New York added 29,000 private-sector jobs, the largest gain since April 2005. The state reported more jobs in leisure and hospitality, manufacturing, construction and professional and business services.

Several midwest states reported large job increases in manufacturing. Increasing industrial output has powered the recovery in the past year. Automakers in particular have boosted production after many car dealers cleared their lots during last year's Cash for Clunkers program.

Michigan reported a jump of 27,800 new jobs in July, most of them in manufacturing. But that figure was likely inflated by General Motors' decision last month to forgo its usual summer shutdown to retool its factories for the upcoming model year. That reduced layoffs at the company and for many of its suppliers in July.

Indiana, Illinois and Ohio also posted job gains in manufacturing.

But the boost in manufacturing jobs may fade soon, Cochrane said. Many companies have finished rebuilding inventories that were pared back during the recession. Retailers and other companies now have their inventories more in line with sales. That means that unless sales pick up, less production will be needed in the second half of this year.

Nevada posted the nation's highest unemployment rate for the third straight month, at 14.3 percent. It took the top spot from Michigan, which held it for four years, in May. Michigan's rate, the second highest, fell slightly to 13.1 percent from 13.2 percent in June. California posted the third-highest rate, at 12.3 percent, the same as the previous month.

The states with the lowest jobless rates last month were North Dakota, at 3.6 percent; South Dakota, at 4.4 percent; and Nebraska, at 4.7 percent.

Overseas Concerns

Overseas Markets

European Markets closed lower. Germany's DAX fell 1.2% and the CAC 40 in France slipped 1.3%. Britain's FTSE 100 was 0.3% lower.

Asian Markets ended the session in negative territory. Japan's Nikkei led declines in the region, sinking nearly 2%. The Shanghai Composite dropped 1.7% and the Hang Seng in Hong Kong fell 0.4%.

The dollar rose against the euro, the U.K. pound and the Japanese yen.

Company Earnings Reports



QE-aug20,2010



AnnTaylor Stores Corp (ANN)

Women's clothing retailer AnnTaylor Stores Corp (ANN) said quarterly sales rebounded at its namesake stores, and it was able to sell more merchandise at full price.

The company posted a 6.1 percent increase in comparable sales, which include online. Sales at stores open at least a year, or same-store sales, rose 19.6 percent at the namesake Ann Taylor chain.

Total sales rose nearly 2.8 percent to $483.5 million, but fell short of analysts' expectations of $503.3 million, according to Thomson Reuters.

Internet sales also gave the company a boost. At the more casual and less expensive LOFT division, 54.6 percent jump online revenue made up for a 3.1 percent drop in same-store sales.

The company said it expected total sales of $495 million and a "high-to-mid single digit" percentage increase in comparable sales in the current quarter. For the full year, AnnTaylor expects companywide sales of $1.95 billion, a shade below Wall Street estimates.

Net income was $18.6 million, or 31 cents per share, in the second quarter ended July 31, compared with a year-earlier loss of $18 million, or 32 cents per share.

Excluding a restructuring charge, the company earned 32 cents per share, in line with analysts' forecasts, according to Thomson Reuters.

Gross margins rose 2.6 percentage points to 55 percent on fewer markdowns at Ann Taylor stores.

During the quarter, the company closed four Ann Taylor and five LOFT stores, and now expects 56 closures across both brands for the year. It now operates nearly 900 stores.

AnnTaylor's board authorized increasing the company's share buyback program to $400 million.

The stock was up 0.8 percent at $15.50 in premarket trading.

Hormel Foods Corp (HRL)

J.M. Smucker (SJM)

Jam and jelly company J.M. Smucker (SJM) posted an adjusted profit of $1.04 per share on higher gross margins and a lower tax rate, exceeding the 96 cents per share analysts were looking for.

Company News and Movements:



aotm-aug20,2010



Shares of Research in Motion (RIMM) dropped 3.4% to $48.72 after analysts at Morgan Stanley downgraded the BlackBerry maker to a "sell" rating because the company could lose market share more quickly than previously anticipated.

The downgrade sent the stock inching closer to the company's 52-week low of $47.42 a share.

nah-aug20,2010


nal-aug20,2010



Options Movement

Akamai Technologies (AKAM)

Options trading was brisk on Akamai Technologies Inc. (AKAM) on Thursday, as more than 66,900 contracts crossed the tape. This surge in volume was more than triple the stock's average daily trading volume of 22,199 contracts, according to data from WhatsTrading.com. In addition, approximately 84% of the volume changed hands on the call side.

Overall, the put/call open interest ratio (SOIR) for AKAM comes in at 0.93, which is lower than 76% of all those taken during the past year. In other words, short-term options players have been more optimistically aligned toward the shares only 24% of the time during the past year.

However, there are still some signs of skepticism toward the security. During the past two trading weeks, the number of AKAM shares sold short increased by 4.6% to 10.3 million. This accumulation of bearish bets accounts for nearly 6% of the company's float.

What's more, Wall Street is giving the stock the cold shoulder. According to Zacks, the security has earned five "buy" ratings and 14 "holds."

Technically speaking, the shares of AKAM are up more than 77% since the beginning of the year. The equity has rallied along the support of its 10-week and 20-week moving averages. However, the security is currently battling resistance in the 46 region.

akam-aug20,2010



Hewlett-Packard (HPQ)

After the close on Thursday, Hewlett-Packard Co. (HPQ) announced that its third-quarter profit rose 6%, helped by server and personal computer sales. It was HPQ's first quarterly report since the surprise ouster of Chief Executive Mark Hurd. The firm reported net income of $1.77 billion, or 75 cents a share, for the third quarter, up from $1.67 billion, or 69 cents a share, a year ago. Excluding items, HPQ earned $1.08 a share, while revenue climbed 11% to $30.7 billion.

For fiscal 2010, HPQ repeated the forecast it provided two weeks ago, predicting non-GAAP earnings of $4.49 to $4.51 a share on revenue of $125.3 billion to $125.5 billion.

Meanwhile, options players jumped on the stock ahead of the report, as more than 119,100 contracts changed hands Thursday. This surge in volume was more than double the stock's average daily trading volume of 54,630 contracts, according to data from WhatsTrading.com. Furthermore, roughly 67% of the volume changed hands on the call side.

Traders have shown a definite preference for calls on HPQ. The International Securities Exchange (ISE) has reported nearly two calls purchased to open for every one put purchased to open during the past two trading weeks. This ratio of calls to puts is higher than 63% of all those taken during the past year, pointing to a rising optimism.

Meanwhile, the SOIR for HPQ comes in at 0.61, which is lower than 90% of all those taken during the past 12 months. In other words, short-term options players have been more optimistically aligned toward the shares only 10% of the time during the past 12 months.

Wall Street remains smitten with the shares, as well. Zacks reports that the security has earned 25 "buy" ratings and six "holds." Should this optimism begin to unwind, it could create a fresh wave of selling pressure on the security.

From a technical perspective, HPQ has declined more than 20% since the beginning of 2010. The equity has been pressured lower by its 10-week and 20-week moving averages and is currently testing round-number support at the 40 level.

hpq-aug20,2010



Petroleo Brasileiro (PBR)

Brazilian federal oil company Petroleo Brasileiro SA (PBR) said Thursday that talks for an oil-for-shares swap with the government are continuing, but said recent reports about a price for the oil involved in the deal are "speculation."

PBR was the focus of some heavy options trading on Thursday, as more than 50,600 contracts crossed the tape. This jump in volume was more than double the stock's average daily trading volume of 25,026 contracts, according to data from WhatsTrading.com. What's more, traders were feeling bearish, as 58% of the volume crossed the tape on the put side.

On the other hand, the ISE has reported an increase in call trading. During the past 10 trading sessions, more than seven calls have been purchased to open for every one put purchased to open. This ratio of calls to puts is higher than 98% of all those taken during the past 12 months.

Meanwhile, the SOIR for PBR is in the middle of its annual range with a reading of 0.91. This ranking indicates that complacency still lingers toward the shares.

Elsewhere, we find that Wall Street is betting on a rally. According to Zacks, the stock has earned seven "buy" ratings and four "holds." Any downgrades from this group could spell trouble.

Technically speaking, the stock has shed more than 27% since the beginning of the year. The shares of PBR have been in a steady downtrend under their 10-week and 20-week moving averages since their peak around 52 in December 2009.

pbr-aug20,2010



Gap Inc. (GPS)

Trendy retailer Gap Inc. (GPS) posted a stronger-than-expected quarterly profit after the close on Thursday, helped by a sales rebound for its Banana Republic and Old Navy chains and a surge in online sales. GPS said net income rose 2.6% to $234 million, or 36 cents per share, from $228 million, or 33 cents per share, a year earlier. Analysts were expecting 35 cents a share. Total sales rose 2.2% to $3.32 billion, in line with Wall Street estimates. Gap kept its 2010 profit forecast of $1.77 to $1.82 per share, compared with a Wall Street forecast of $1.79 per share.

Same-store sales rose 3% at Banana Republic, compared with a 15% decline a year ago, and rose 2% at Old Navy. Gap got a further lift from online sales, which rose 15%, in part by expanding its online shopping beyond the United States to a total of 55 countries during the quarter. Gap same-store sales slipped 4%.

Meanwhile, inventory per square foot was up 12% at the end of the quarter, compared with a year earlier, and the company said it expects inventory to be up by a "high single digits" percentage at the end of the third quarter.

Options traders grabbed up puts ahead of the company's earnings report. The International Securities Exchange (ISE) has reported 2.2 puts purchased to open for every one call purchased to open during the past 10 trading sessions. This ratio of puts to calls is higher than 96% of all those taken during the past year.

Meanwhile, short interest has also shot higher. During the past month, the number of GPS shares sold short increased by nearly 41% to 24.5 million. This accumulation of bearish bets accounts for nearly 5% of the company's total float.

J.M. Smucker Co. (SJM)

Earnings continue to roll in, with J.M. Smucker Co. (SJM) stepping into the earnings spotlight this morning. The company announced a quarterly profit that beat Wall Street estimates, helped by higher margins in the U.S. retail and special markets segments. Earnings came in at $102.9 million, or 86 cents a share, compared with net income of $98.1 million, or 83 cents a share, a year ago. Excluding items, the company earned $1.04 a share. Revenue remained almost flat at $1.05 billion. Analysts had expected a profit of 96 cents per share on revenue of $1.07 billion.

For 2011, the company expects net sales to grow slightly more than the 3% it earlier forecast.

The International Securities Exchange (ISE) saw an increase in pessimism heading into the company's earnings report. The 10-day put/call volume ratio comes in at 0.97, which is higher than 72% of all those taken during the past 12 months.

Wall Street likes the security. According to Zacks, the stock has earned nine "buy" ratings and four "holds." This configuration doesn't leave a lot of room for potential upgrades despite the company's strong earnings report.

Nordstrom Inc. (JWN)

High-end retailer Nordstrom Inc. (JWN) announced after the close on Thursday that it has approved up to $500 million of stock repurchases, joining a long roster of corporations launching similar efforts as they dig into the mountains of cash they have hoarded since the financial crisis of 2008. The firm, which has a market capitalization of about $6.8 billion, authorized those repurchases through January 2012.

In addition, the company reported that its board of directors has approved a quarterly dividend of 20 cents per share, payable on Sept. 15, 2010, to shareholders of record on Aug. 31, 2010.

From an options point of view, traders are extremely optimistic toward JWN. The International Securities Exchange (ISE) has reported more than two calls purchased to open for every one put purchased to open during the past 10 trading sessions. This ratio of calls to puts is higher than 82% of all those taken during the past year, pointing to a rising optimism.

Meanwhile, the put/call open interest ratio (SOIR) for JWN comes in at 0.99, as put open interest nearly equals call open interest among options slated to expire in less than three months. However, on an historical basis, this reading is lower than 99% of all those taken during the past 12 months. In other words, short-term options players have been more optimistically aligned toward the shares only 1% of the time during the past 52 weeks.

One thing to keep in mind is that some of these calls could be used as hedges against existing short positions. During the past month, the number of JWN shares sold short increased by 14% to 10.6 million. This accumulation of pessimistic positions accounts for more than 6% of the company's total float. A call position matched with shorted shares would protect the bearish bet from an unexpected rise in the stock.

Meanwhile, Wall Street is split in its stance toward the security. According to Zacks, the stock has earned 10 "buy" ratings, nine "holds," and one "strong sell." This configuration leaves ample room for potential upgrades following the company's positive news.

Technically speaking, the shares of JWN are down more than 17% since the beginning of the year. The equity staged a stellar rally along the support of its 10-week and 20-week moving averages from March 2009 through April 2010. However, since reaching a peak in April, the stock has retreated, and is now hitting resistance at its 10-week trendline.

jwn-aug20,2010



Traders should keep a close watch on round-number support at the 30 level. If the stock can bounce off this level, it could win over some of the bears. However, a breach of this region could increase selling pressure on the security.

options action

The following companies had some impressive options movements:-

Netflix, Inc. (NFLX)

Netflix, Inc. (NFLX) has had a dramatic week: on Tuesday the DVD diva touched a new 52-week high above $140, but by Wednesday the party was over when Morgan Keegan smacked the shares with a "sell" rating.

nflx-aug20,2010,z

In fact, analysts are generally quite bearish toward the online movie rental company. According to Zacks, the stock has earned six "buy" or better ratings, 13 "holds," and nine "sells."

Meanwhile, option players have flocked to NFLX . Roughly 68,000 contracts crossed the tape on Thursday -- well above the stock's usual daily volume of around 50,000 contracts. Puts were all the rage, with 38,000 of these bearish bets traded.

Thursday's attention to puts is a change of pace for NFLX. In the past two weeks, speculators on the International Securities Exchange (ISE) have bought to open 2.2 calls for every put, a ratio which ranks above 95% of all other readings taken during the last year. In other words, speculators on the ISE have rarely initiated bullish bets on NFLX at a faster pace.

Thursday's activity saw roughly 5,700 contracts cross the tape for the September 120 put. Meanwhile, 3,500 contracts changed hands on the September 135 put. But this put activity was not necessarily bearish. The bulk of these puts traded at the bid price, revealing they were likely sold. Open interest at each of both out-of-the-money puts increased substantially overnight, confirming sell-to-open activity at these strikes.

In other words, it seems that traders are confident that NFLX will remain above the $120 and $125 levels over the next month. For the record, NFLX is currently trading around $129.10.

nflx-sept,2010



For the September series -- which assumes front-month status after today's close -- peak put open interest can be found at the 20 strike, with over 5,000 contracts in residence. Conversely, peak call open interest of over 4,000 contracts can be found at the 140 strike.

Meanwhile, this week's downgrade is just a small hiccup in NFLX's bigger technical picture. The stock has been trending steadily upward since July 2009 along steadfast support from its 10-week and 20-week moving averages. In fact, in 2010 alone, this duo has led NFLX to gains of 133%.

While NFLX did pull back following Wednesday's bearish note, the equity still remains several points above intermediate-term trendline support. Furthermore, pullbacks to these moving averages generally precede a rally from the shares. In fact, just a few weeks ago, NFLX pulled back to its 20-week moving average, bounced, and rallied to this week's acme.

nflx-aug20,2010



With NFLX docked above staunch support, the stock appears poised to resume its uptrend. As this happens, an unwinding of pessimism from the shorts and brokerage bunch could help fuel the shares to new heights.

Bullish flow detected in Terex (TEX) , with 10399 calls trading, or 8x the recent average daily call volume in the name.

Bullish flow detected in Tyco International (TYC) , with 3936 calls trading, or 2x the recent average daily call volume in the name.

Bearish activity detected in Westlake Chemical (WLK) , with 2802 puts trading, or 72x the recent average daily put volume in the name.

Increasing options volume is also being seen in Xerox (XRX), Textron (TXT) , and DELL.

Conclusion

Stocks tumbled Thursday after three key economic reports slammed confidence. Weekly jobless claims rose to their highest level since November, manufacturing activity in the Philadelphia region slowed, and a key measure of future economic activity was less than had hoped.

The Dow lost 1.4%, while the S&P 500 and Nasdaq both shed 1.7%. "When the area of great concern in the market place (jobs) gets a dismal report and the bright spot in the economy (manufacturing) gets whacked into oblivion, fear came back into the marketplace," Phil Flynn, a senior market analyst with PFG Best, said in a note to investors. "Some call it the risk aversion trade but I say that's a polite way of saying people are scared."

Weak economic reports have spurred worries about a slower recovery this summer, but bullish traders have been eager to put those fears on the back burner amid some strong earnings from Fortune 500 companies in the last few weeks. Now that the quarterly reports are tapering off, some of those gloomy economic reports are once again taking over the spotlight.

"Investors remain on edge over the direction of the economy," said Peter Cardillo, chief market economist at Avalon Partners. "Recent economic reports, especially employment data, continue to be a worry for the market and overshadow the good news, including the expansion of corporate America."

A resurgence in deal activity to the highest levels since late 2009 contrasted with persistent reminders of the struggling global economic recovery.

Corporate mergers and acquisitions activity gave stocks a boost early this week, but was overshadowed later by weak economic reports. Mergers and acquisitions activity is usually seen as a hopeful sign for the economy because it means companies are willing to spend money, betting that their businesses and the economy will grow in the coming quarters.

While takeover activity and merger deals are picking up steam, a sign that companies are preparing for "better times," Cardillo said the market is still debating whether the economy is headed for a double-dip recession.

"Earnings season came in pretty strong; M&A activity was very encouraging this week and that's usually a bullish sign," said Ryan Detrick, senior technical strategist at Schaeffer's Investment Research in Cincinnati, Ohio.

"The flip side is the economic data this week has been very, very poor. No one's making a big bet either way, it's just short-term moves."

"There's been the realization that the economy in the second half of this year -- and therefore corporate profits -- are going to be more modest than where a lot of people thought they would be six months ago," said Adrian Cronje, partner and chief investment officer at Balentine.

Some investors remained optimistic, arguing that the market had focused too much on short-term jobs numbers. "We bounced back from the worst recession we've seen in modern history," said Roy Williams, chief executive of Prestige Wealth Management. He says he expects the numbers to show a pickup in jobs and retail spending, though he allowed that volatility would be a mainstay through the fall.

Also, a fall in the euro on Friday reminded investors of lingering sovereign-debt concerns and added to the week's push-and-pull between encouraging corporate news and weaker-than-expected economic data.

With August options expiring on Friday, options investors are bracing for a quiet market next week.



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