Bulls are painting the Street black this morning, with futures on all three major market indexes pointed north of breakeven. Investors are in a grand mood, with a 100-point pop in Dow Jones Industrial Average (DJI) futures positioning the blue-chip barometer to reclaim its perch atop the round-number 12,200 mark.
Equity option activity on the Chicago Board Options Exchange (CBOE) saw 845,525 call contracts traded on Tuesday, compared to 591,835 put contracts. The resultant single-session put/call ratio arrived at 0.70, while the 21-day moving average was 0.79.
From the Trading Floor
"The financial sector led a low-volatility rise yesterday, as the S&P 500 Index (SPX) managed to close within a fraction of its 200-day moving average," pointed out Senior Options Strategist Tony Venosa. "The latest announcement from the European Central Bank (ECB) on interest rates will have an effect on our markets today. I will be watching to see if the 200-day moving average can be overtaken on a closing basis."
Currencies and Commodities
In earnings news, Mattress Firm Holding Corp. (MFRM - 35.30) banked a first-quarter profit of $9.7 million, or 29 cents per share. Excluding items, earnings landed at 31 cents per share. Aided by a 16% jump in same-store sales, total revenue rose 38% to $209.8 million. The results were mixed, with analysts calling for a per-share profit of 25 cents on a heftier $212 million in sales. Short interest increased by a staggering 68.5% during the last two reporting periods, and now accounts for a brow-raising 38% of the stock's float. MFRM is down 15.7% in pre-market trading.
Bob Evans Farms Inc. (BOBE - 40.44) said its fiscal fourth-quarter profit rose a year-over-year 20% to arrive at $22 million, or 76 cents per share. On an adjusted basis, BOBE recorded a per-share profit of 80 cents, while revenue backpedaled 2.9% to $406.5 million. While the bottom-line results handily beat analysts' forecast for earnings of 74 cents per share, BOBE's top line fell short of the $414 million in sales expected by the Street. Short-term calls were in favor on BOBE ahead of earnings, with the stock's Schaeffer's put/call open interest ratio (SOIR) docked at 0.21.
Tempur-Pedic International (TPX - 43.67) slashed its full-year earnings guidance to $2.70 per share on $1.43 billion in revenue, down from its earlier outlook for a profit of $3.80 to $3.95 per share on $1.60 billion to $1.65 billion in revenue. In a company release, CEO Mark Sarvary attributed the downward revision to "an unprecedented number of new competitive product introductions which have been supported by aggressive marketing and promotion." Analysts, on average, were looking for a fiscal 2012 profit of $3.93 per share on $1.65 billion in revenue. No fewer than 77% of analysts deem TPX "buy" or "strong buy." TPX is poised for a 36.2% plunge right out of the gate.
Earnings and Economic Data
The revised nonfarm productivity and unit labor costs data for the first quarter, the Fed's Beige Book for May, and the regularly scheduled crude inventories report will hit the Street today. Meanwhile, investors will get a chance to reflect on earnings results from Analogic (ALOG), Men's Wearhouse (MW), Hovnanian Enterprises (HOV), and Vail Resorts (MTN).
The Case for Big Moves in IWM and QQQ
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