HOTS Weekly Options Commentary
Peter Stolcers
February 23, 2007
The market was virtually unchanged last week. It is in a two-steps-forward/one-step-backwards mode. Over 90% of the S&P 500 companies have reported earnings and they have been positive. The earnings growth rate is just under 10% and the guidance has been good. The inflation numbers were released last week and the CPI came in a little “hotter” than expected. Humphrey-Hawkins and the FOMC meeting two weeks ago left interest rate sentiment “status-quo”. The market is flat and it lacks a catalyst. One could argue that we keep making new highs and the market is moving, however, the moves are relatively small and they lack follow through. The economic releases next week (Durable Goods, GDP) have recently produced minor reactions. From a technical perspective, you have to buy the dips and sell the rallies to make money. Next week, end-of-the-month buying should support prices. The easy money in this market has been made and the market will settle into its normal choppy mode until a material piece of news generates a breakout or a breakdown. We will continue to look for bullish opportunities since all of the major support levels are intact and the trend is still up. In this week’s chart you can see those support levels are converging at SPY 141.
