HOTS Weekly Options Commentary
Peter Stolcers
February 4, 2007
Overall, the economy seems likely to expand at a moderate pace over coming quarters… some tentative signs of stabilization have appeared in the housing market… readings on core inflation have improved modestly in recent months, and inflation pressures seem likely to moderate over time… however, the high level of resource utilization has the potential to sustain inflation pressures." These were the Fed’s comments. Last week, a 3.5% GDP growth rate was much stronger than the 2% recorded in the third quarter, and it handily beat the 3% expected by economists. The jobs number on Friday was in line and average hourly earnings increased by less than expected. These economic highlights pushed the Dow Industrial and Dow Transport averages to new historic highs. Monday, the ISM is released and it is the biggest number in a “light” week. On the earnings front, the news was good last week and cyclical stocks rallied on strong numbers. New earnings releases are starting to tail off and here are a few highlights for next week: HUM, ISE, DVN, AET, BRCM, WLT, and PNRA. From a technical standpoint, the SPY made a new multi-year high and it is grinding higher. Tech stocks are not participating, but that can change quickly. A strong economy and solid earnings will keep a bid to this market. It may not run higher, but at very least, it will maintain this level until something changes.
GO CHICAGO BEARS!
