Summary: A Winning Streak For The US Markets

The market held and we appear to have a streak! What I like about today’s (Thursday) action is that the market was tested on the open, 713 on the S&P (^GSPC), and held and went on to run up into the midday in the face of downgrades and foreign market pressure. I am on watch resistance in the mid 760’s and waiting to see how this will be challenged and possibly broke. Sectors that really shined today, Finance (XLF), REITs (IYR) and Education. This market has bounced off the lows of last week and has been breaking through resistance quite nicely. Most notable economic number is at 8:30 ET Import Prices ex-oil.

After Hours

Stocks moved broadly higher following a day of mostly positive economic and stock news Thursday. On the economic front, a report released before the start of trading in New York showed retail sales falling .1 percent in February. Economists had expected a .5 percent decline. Meanwhile, excluding autos, sales rose .7 percent, compared to expectations for a.1 percent decline.

Speaking of autos, General Motors (NYSE:GM) was the second best gainer in the Dow Jones Industrial Average (^DJI). GM rode 17.2 percent higher after the company said it doesn’t need any additional government help to get through the month of March. Many of the battered financials continued to bounce back. BofA (NYSE:BAC) and JP Morgan (NYSE:JPM) helped lift the industrial average with gains of 18.7 and 13.7 percent, respectively. 29 of the Dow thirty closed higher. Only Microsoft (NASDAQ:MSFT) fell and the Dow added 240 points on the day. The CBOE Volatility Index (^VIX) lost another 2.43 to 41.18 and approximately 7 million puts and 9.8 million calls traded on the options exchanges.

Bullish

Pfizer (NYSE:PFE) and Merck (NYSE:MRK) were among the best gainers in the Dow Jones Industrial Average Thursday. Pfizer rallied 9.6 percent after the pharmaceutical giant said it has stopped trials of Sutent after the treatment showed significant efficacy in pancreatic islet cell tumor patients. PFE options volume was twice the typical levels, with 120,000 contracts traded and call activity representing 78 percent of the volume. MRK gained 9.5 percent and volume was double the normal, with 34,000 contracts traded and call volume accounting for 74 percent of the activity. Bullish trading was also seen in Fluor (NYSE:FLR), Focus Media (NASDAQ:FMCN), and Tyco (NYSE:TYC).

Bearish

Data Domain (NASDAQ:DDUP) puts saw active trading. Shares finished down 30 cents to $13 and 10,000 puts traded, compared to 1,000 call options. April 12.5 puts were the most actives. 6,150 traded and about 70 percent traded ask-side of the bid-ask spread. It appears that buyers were taking positions on concerns about weakness in the share price between now and April options expiration. Bearish trading also surfaced in AK Steel (NYSE:AKS), ON Semiconductor (NASDAQ:ONNN), and Nabors (NYSE:NBR).

Index Trading

Volume picked up in the PHLX Bank Sector Index (^BKX). The index, which tracks the performance of two dozen different banking names, rallied 2.62, or 11.2 percent, to 25.96. Most of the options activity was focused on the March 22.5 and 25 calls early in the day when the index was near 24.5. It appears that a strategist bought this spread (buying the 22.5s and selling the 25s) 2500X for $1.45, perhaps expecting the index to move higher and remain above 25 at next week’s expiration. The S&P 500 Index, the CBOE Volatility Index, and the Russell 2000 (^RUT) also had among the more actively traded contracts. Approximately 540,000 puts and 620,000 calls traded across all products.

ETF Trading

iShares Biotech Fund (NASDAQ:IBB) rallied Thursday after Roche finalized its bid for Genentech (NYSE:DNA) and Gilead (NASDAQ:GILD) said it was buying CV Therapeutics (NASDAQ:CVTX). IBB, which is an exchange-traded fund that holds a basket of NASDAQ-listed biotech names, rallied $3.68 to $63.91. Call volume jumped to 14,000 contracts, or about five times the normal, amid increasing interest in IBB April 70, March 65, and June 60 calls. Outside of that, the Powershares QQQ (NASDAQ:QQQQ), the SPDR Trust (SPY), and the Select Sector Financials (XLF) had among the most actively-traded securities. Approximately 2.6 million puts and 3.4 million calls traded across all exchange traded funds.

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