Heading into Triple-Witch, Stocks Look Higher

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On expiration day it looks like stocks are set to extend yesterday's gains into this morning.

Not that things couldn't get a little choppy. Triple-witching -- the quarterly expiration of stock options, index futures and options on index futures -- is famous for introducing a little volatility into the market. Things may be a little more muted this time around -- as noted in

Options Buzz yesterday, most hedges have apparently already been unwound. But don't bet the farm -- no one seems to know whether the bias on the witch is for stocks to go higher or lower this time around.

"Might go up, might go down," says Bill Allyn, head of block trading at

Jefferies

. "There's a camp of people that say there could be buy programs at the close, but there's another camp that says, because we've had stocks go up in the last hour of trading over the last three days, that bias isn't there."

Whatever the witch will be, however, Allyn says the market's looking good.

"The tone has been excellent," he says. "The oils look like they've shaken off some of the criticism. All in all, we're in good shape."

At 9 a.m. EST, the

S&P 500

futures are up 2.80, indicating a positive open. The 30-year Treasury bond is up 6/32 at 103 5/32, dropping the yield to 5.90%.

Japanese stocks edged higher, despite the announcement that beverage maker

Yakult

(also the owner of the

Yakult Swallows

baseball team) had huge trading losses. Hope springs eternal, of course, and Japanese investors expect that perhaps, maybe, the ruling

Liberal Democratic Party

will release a stimulus plan next week that, while not a barn burner, may not be an utter disappointment. The

Nikkei

climbed 151.45 to close at 16,830.47. (

As originally published, this story incorrectly said the Nikkei rose 119.19 to close at 11,564.23.

)

Yakult said that it had 105.7 billion yen in trading losses, mostly from derivatives. Naoki Kumagai, who oversaw the trading (and whose idea it apparently was in the first place), and Chairman Jun Kuwahara will both resign. Yakult shares lost 12.2%.

The Swallows, who played brilliantly in last year's

Japan Series

against the

Seibu Lions

, are hoping for a repeat this year.

Hong Kong stocks continue to rise on yesterday's positive comments on the yuan and the Hong Kong dollar peg from China's

Premier Zhu Rongji

, and on hopes that interest rates will fall. The

Hang Seng

climbed 119.19 to close at 11,564.23.

European stocks are again hitting records. In Frankfurt, the

Dax

closed up 65.23 at 5001.54, clearing 5000 for the first time. In London, the

FTSE

looks like it will have its first close over 6000. Now it's up 47.1 at 6045.0.

Cummins Engine

(CUM)

warned that, as a result of weak Asian sales and slower-than-expected results from the company's restructuring efforts, its first-quarter earnings will be weaker. Including a one-time charge of $30 million for product coverage costs, the company expects earnings will be flat. Cummins did not provide an operating figure.

First Call

consensus estimates were for the company to earn $1.09.

Yesterday's decision by an Indiana jury that the tobacco industry was not liable for the death of a nurse who had been exposed to secondhand smoke for nearly 20 years may give tobacco stocks a boost today. The trial is considered by many to have been a test case on tobacco industry liability for secondhand smoke-related deaths.

All is not well in tobaccoville, however. A

Kaiser Permanente

study suggesting that cigar smoking nearly doubles the risk of dying from cancer or heart disease is getting play today in

The Wall Street Journal

,

The Washington Post

and the

London Telegraph

, and on

CNBC

. (

The Cleveland Plain Dealer

had the story on Monday.) That could put cigar companies like

Swisher

(SWR)

,

Consolidated Cigar

(CIG) - Get Report

and

General Cigar

(MPP)

under pressure.