Do or Die Time
Stocks finished flat after posting significant gains at the open, helped by robust manufacturing numbers from around the world (China, U.S. and U.K.). Markets were dragged lower as trading took a cautious tone on renewed fears of SEC actions against Wall Street over CDOs and ahead of several major catalysts including: 1) Elections on Tuesday, November 2; 2) FOMC Tuesday-Wednesday November 2-3; 3) ECB/BOE on Thursday November 4 and; 4) October monthly economic data reports throughout the week.
The Dow Jones Industrial Average ended up 6.13 points, or 0.06%, to close at 11,124. The S&P 500 rose 1.12 points, or 0.09%, to close at 1184, and the Nasdaq was down 2.57 points, or 0.10%, to finish at 2504. As the market moved lower this afternoon, traders saw demand for some of the defensive sectors such as telecom and healthcare, while the higher-beta sectors (industrials, discretionary, materials, and financials) came for sale.
The CBOE Volatility IndexI:VIX closed up $0.63, at $21.83. VIX put volume of 65,000 contracts compared to call volume of 138,000, with December 20 puts as the most active strike on 15,300 contracts. November at-the-money options volatility was lower than the December series, suggesting larger, farther out movement.
Neutral price action is the theme on the SPDR S&P 500 ETF (SPY) - Get Report exhibited by selling monthly volatility to lower levels into the election and FOMC. The SPYs closed up $0.04, at $118.53, with overall put volume of 1.3 million contracts trading as compared to call volume of 695,000. November 118 puts were the most active series traded on volume of 127,900 contracts.
PowerShares QQQ Trust (QQQQ) put spreaders were active, bidding up low volatility on the close. The Qs closed up $0.04, at $52.22, on overall put volume of 314,000 contracts compared to call volume of 134,000, with January 50 puts as the most active options series. QQQQ has near-term support at $50.65.
Pfizer (PFE) - Get Report is expected to report Q3 EPS on November 2 before the open. Put option volume of 56,000 contracts compared to call volume of 71,000 contracts. November put option implied volatility is at 27, December is at 26 and January is at 27 versus its 26-week average of 28, indicating non-directional price movement.
The following economic data are expected to be released on Tuesday including: Motor Vehicle Sales throughout the morning, ICSC-Goldman Store Sales due out at 7:45 a.m. EDT and Redbook at 8:55 a.m. EDT.
Notable companies reporting before the open include: ABC, ADM, Aviva, AZPN, BP, CAB, CFN, CLX, CVLT, EMR, EXPD, HAR, HW, JOE, K, LYG, MA, MHS, MPEL, MRO, NEM, NYX, OSG, OZM, PFE, PNX, RDC, RDN, SSP, TEVA, VSH; earnings after the close: CECO, DISCA, ERTS, HIG, HTZ, LNC, MOTR, MRH, MWA, NYX, OPEN, PBI, PEET, PLT, PRI, RLD, SONS, STEC, SVR, TRMB, UDRL, UNM, XL, WYNN.
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