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Further financial anchor hoisting, temporary but satisfying economic headline relief and a holiday bias have a few bulls stepping up to the plate in Thursday’s first half. As of 10:55 ET the “Cubes” (QQQQ) and “SPYder” (SPY) are up .73% to .96% on continued and ‘don’t read too much into it’—seasonally adjusted bull.

An unexpected ouster of top brass at GSE Freddie Mac (FRE) had investors’ wallets last night and remains a strong support with intraday gains of .54 to 5.29. The move implies that changes are being made to facilitate continued operations without a rescue by the US Treasury. Separately and related, peer Fannie Mae (FNM) also received a vote of confidence by Lehman Bros (LEH) and very similar to yesterday’s well-received capitalization report out of Merrill Lynch (MER). Shares of FRE are up .55 at 7.03.

Officially slated economic news has also been supportive of market bulls’ early efforts. Weekly claims dropped from the prior reading to 415K and in-line with Street views. Separately, a stronger-than-expected 3.3% rise in the second quarter for the GDP helped traders put a bid into the futures market. Economists had pegged the data to rise 2.7% following dismal back-to-back quarters. Not as good, the GDP’s surprise strength isn’t supposed to be the start of a lasting trend.

Economists fear the GDP benefited heavily from a perfect storm of sorts, while the economy remains fragile. A combination of foreign buyers aggressively purchasing US products when the Greenback was at record lows and stateside shoppers using one-time rebate checks were critical in feeding the “b-t-e” results. Not that anybody is listening or reading to heavily into the report—if we take the time to appreciate the muscle being flexed at the beach has a few more participants than those attempting similar antics with stocks deep in the canyons of Wall Street.

The remaining bulls not intent on making the upcoming ‘three-day’ a ‘four-and-changer’ are also finding increased intraday support from pressured Black Gold (USO) and natty gas (UNG) contracts. Increasing relief-felt appreciation that TS Gustav is likely to rattle but not likely wreck havoc on Gulf production facilities coupled with news of the IEA pledging supplies should damage actually occur, has resulted in general support for the broader market. Intraday, shares of USO and UNG are off 3% and 8.25% respectively.

A batch of mixed earnings reports from the retail sector are finding bids. Sears (SHLD) is up 2.50 near 89.50 as optimistic eyewear is apparently forgiving the company’s $0.12 earnings miss for actual profits of $0.21 on weaker-than-expected sales. Shares of Coldwater Creek (CWTR) are up .42 at 7.36 after beating and posting in-line guidance. Bulls are donning their horns at Genesco (GCO) on the heels of its “b-t-e” results and upside guidance. Shares are up 1.85 at 34.84. Tiffany’s (TIF) is looking like an investor bauble of choice, up 3.75 at 43.35 on a similar gift-wrapped package. And finally, Men’s Wearhouse (MW) is tacking on 1.60 to 21.61 following its two cent beat, light on revenues and lower guidance. However, judging by the looks of things, that “suits” bulls just fine.

Beneath the radar, well kind of, the Dow’s top performer, Caterpillar (CAT), came out with a mixed, but well-received report this morning. Management sees weakness in the coming months for most established industrial countries, but believes China will continue be strong and afford inroads for the machinery giant. Shares are up 2.10 at 71.66 and clearing a several week in-the-making symmetrical triangle. Sympathy plays for the home-game audience not already building sandcastles stateside, can be found in the likes of Deere (DE), Bucyrus (BUCY), Joy Global (JOYG) and Terex (TEX).

Chris Tyler
Staff Writer & Options Strategist
Optionetics.com ~ Your Options Education Site
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The information offered here is based upon Christopher Tyler’s observations and strictly intended for educational purposes only, the use of which is the responsibility of the individual. 

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