The shares of Palantir Technologies Inc (NYSE:PLTR) have been middling on the charts since a post-earnings pop broke the equity above the 50-day moving average earlier this month -- a trendline that quickly turned into close support. At last check, PLTR was up 3% to trade at $24.73.

During this time, Palantir stock landed on Schaeffer's Senior Quantitative Analyst Rocky White's list of stocks that have attracted the highest weekly options volume within the past two weeks, with new names added to the list highlighted in yellow. Specifically, 808,948 weekly calls and 290,438 weekly puts have been exchanged during this time. The most popular contract during that two-week period was the weekly 8/13 25-strike call.   

Of the four analysts in coverage, one carries a "strong buy" rating on Palantir stock, with one a "hold," and two a "strong sell." Meanwhile, the 12-month consensus price target of $24.61 is in line with current levels. 

Now could be a good time to weigh in on the security's next move with options. The stock is seeing attractively priced premiums at the moment, per PLTR's Schaeffer's Volatility Index (SVI) of 46%, which sits in the 2nd percentile of its annual range.

The Covid-19 vaccine produced by Pfizer Inc. (NYSE:PFE) in partnership with BioNTech (BNTX) has become the first to receive full approval from the U.S. Food and Drug Administration (FDA). Many are speculating that the fresh approval may encourage more people to get vaccinated, and push more companies to require vaccination for their employees. The news isn't just giving PFE a boost -- with the equity last seen up 2.9% at $50.10 -- it is giving the broader market a lift as well. 

Not only that, it has  sparked an uptick in bullish trading volume in the options pits. So far, 859,000 calls have crossed the tape, which is double what is typically seen at this point. Most popular is the 8/27 51-strike call, followed by the 50-strike call in the same series, with positions being opened at both. 

A shift in sentiment among short-term options traders could help push PFE even higher. The security's Schaeffer's put/call open interest ratio (SOIR) stands higher than 84% of readings from the last year. This means these traders have rarely been more put biased. 

PFE is trading back within a chip shot of its record closing high of $50.49, and earlier came right within striking distance its all-time high of $51.86, touched last Wednesday, Aug. 18. The equity sports a year-to-date lead of 35.7%, with a solid leg of support at its 10-day moving average over the past couple months. 

Despite these recent highs, analysts remain skeptical, meaning there could be room for upgrades going forward. Of the 13 in coverage, only four say "strong buy," compared to nine "hold" ratings. Plus, the 12-month consensus price target of $45.44 is a 9.2% discount to current levels. 

A California judge ruled a 2020 ballot measure exempting delivery drivers and ride-share employees from a state labor law, known as Proposition 22, unconstitutional on Friday. The measure was aimed at locking in these workers' status as independent contractors and not employees. For now, Proposition 22 remains in place, but the shift has put some weight on several major companies that rely heavily on gig-economy workers, including ride-share names Lyft Inc (NASDAQ) and Uber Technologies Inc (NYSE:UBER), as well as food delivery concern DoorDash Inc (DASH). 

UBER is managing to brush off some of this shakiness this morning, last seen up 1.1% at $40.38, though earlier it hit a nine-month low. Its stock has been sinking since running up to the $52 level, pressured lowed by the 10-day moving average, and now sporting a 21.2% year-to-date deficit. Plus, last month's news that SoftBank was selling a third of its stake in the company didn't help matters. It's worth noting the security may have been overdue for a short-term bounce, however. This is per its 14-day Relative Strength Index (RSI) of 28, which is sitting firmly in "oversold" territory. 

LYFT and DASH aren't faring as well today. The former was last seen down 0.4% at $45.70, while the latter is off 1.8% at $180.76. Lyft stock has seen a similar fate as UBER, with pressure at the 30-day moving average guiding the equity lower over the past few months to a 7.7% year-to-date deficit. Plus, the stock hit its lowest point since late January earlier today. 

Puts on LYFT are running at double the average intraday volume, with 11,000 contracts across the tape so far, neck-and-neck with the 11,000 calls exchanged. The two most popular are the weekly 8/27 47-strike call and the 45-strike put, with positions being opened at both. 

Meanwhile, DASH is the only one of the three sporting a positive return for the year, up 26.5% in 2021. The equity also recently reeled on news that SoftBank was selling its stake in the company as well. When we last mentioned DoorDash, its 40-day moving average was keeping some of these pullbacks in check. Today, the security is testing its footing at this moving average, though its threatening to close just south of here for the first time since early June. 

“…the SPX is just below the 4,475 level, which is double the March 2020 closing low of 2,237.40. Many investors may be anchored to this low and be tempted to take some money off the table if the index doubles the 2020 closing trough…The bottom of the channel ranges between 4,363 on Monday and 4,387 on expiration Friday ...The SPY 440-strike, which is equivalent to 4,400 on the SPX, is the strike with the biggest call and put open interest. It could be supportive if a SPX decline emerges this week, suggesting such a decline would be relatively shallow.”

          -Monday Morning Outlook, August 16, 2021

I was more active than usual with real-time observations on Twitter last week amid standard August expiration week for CBOE Market Volatility Index (VIX—18.56) futures options, plus the S&P 500 Index (SPX—4,441.67) again testing the bottom of an eight-month bullish channel.

In fact, the support and resistance levels that I highlighted in last week’s commentary came into play, with the peak in the 4,475 area, double last year’s closing low. Sellers emerged at this level coincident with Covid-19 trends heading in the wrong direction, and growing evidence that the Federal Reserve may begin its tapering of bond purchases this year, per minutes from the July meeting published in the middle of last week. Anyone paying attention to comments from various Fed governors during the past few weeks were likely not surprised by tapering comments in those minutes.

The rejection at 4,475 saw the lower boundary of the channel in place since mid-November 2020 come into play, and it was from that area that the SPX found support and rallied, suggesting the bulls remain in control. As we look ahead to this week, the lower boundary of this channel ranges between 4,391 on Monday to 4,409 at Friday’s close. Even if there is a break of this channel, which has occurred a few times this year, the bears have their work cut out for them, as the 50-day and 80-day moving averages at 4,350 and 4,290, respectively, have supported pullbacks this year.

Stick with bullish positions until the SPX spends more than a few days below its channel, and/or it breaks below moving averages that have supported pullbacks this year. Amid fears of too much optimism in the market, technical deterioration in the SPX is needed to strike fear in the longs and/or embolden the shorts.  

It is not a slam dunk that my definition of technical deterioration is enough to strike such fear in all market participants, but it is a start in terms of a quantified way of measuring a bullish pattern potentially changing in those looking to buy dips.   

Just like last month, the VIX experienced a pop around expiration. Just as it pulls back to big put open interest strikes, it is as if there is a concerted effort to ensure most or all the put open interest at put-heavy strikes expires worthless. Per the open interest configuration that I posted on Twitter the day prior to Wednesday morning’s August VIX futures settlement, there were indeed a plethora of VIX put contracts that expired worthless, with the Wednesday morning settlement reading at 18.56, above the put-heavy strikes at 15-18.

By Thursday, Aug. 19 -- and as I alluded to on Twitter -- the VIX was nearing its 2020 close at 22.75, which marked the July peak and the March peak too. This area was also roughly 50% above its recent closing low. By Friday, Aug. 20, the VIX was below 20 in what appears to be another short-lived expiration-related pop. Based on the VIX’s behavior in March, July, and last week, if the VIX were to close above its 2020 close, we could see volatility begin to rear its ugly head in a more serious way, so continue to stay in tune with this level if volatility surges again in the near term.

Near the end of this week, the Federal Reserve Bank of Kansas City hosts dozens of central bankers, policymakers, academics and economists from around the world at its annual economic policy symposium in Jackson Hole, Wyoming. Symposium participants include prominent central bankers, finance ministers, academics, and financial market participants from around the world. As I said last week, and on Schaeffer's podcast, this meeting has historically brought announcements on shifts in Fed policy, if there is a shift or pivot of some kind.

“They also agreed to remove the word ‘significantly’ when characterizing the dependence of the path of the economy on the course of the virus.”

- Federal Open Market Committee (FOMC) minutes from July meeting published August 18, 2021

The upcoming scenario with respect to the Fed reminds me of late 2018 to a certain extent, when the Fed was considering raising rates as market participants grew wary about a looming trade war with China. Now, the delta variant of Covid-19 is creating more havoc than other variants, generating concerns about the economic recovery around the world. This is ironic in context of the Fed’s view on the impact of the virus, according to its July minutes and excerpted above. Interpretations are the Fed still isn’t as concerned with the virus’s impact going forward or it is dated information that this body was working with at the time.

In fact, just last week Goldman Sachs slashed projected third-quarter U.S. gross domestic product (GDP) growth from 9% to 5.5%, due to the latest emerging virus threat. The emerging growth threat has parallels to late 2018 because the FOMC minutes indicated most Federal Reserve members see tapering of bond purchases potentially beginning this year.

Todd Salamone is Schaeffer's Senior V.P. of Research

Continue Reading:

• The Week Ahead: Looking Ahead to Next Week's Slew of Economic Data
• Indicator of the Week: Contrarians Should Target These Sectors

It has been a tumultuous last few days on Wall Street, after the Federal Reserve's meeting minutes cast a shadow over investor sentiment mid-week. The week started off on a good note, though, as both the Dow and S&P 500 notched their fifth-straight record closes on Monday, despite falling earlier in the day. Traders were on high alert, as the Taliban took over Afghanistan following the removal of U.S. troops. Things took a turn for the worse on Tuesday, after dismal U.S. retail sales data drove the blue-chip index to shed triple digits and snap its win streak, as the Cboe Volatility Index (VIX) roared back to life.

Wednesday did not offer much reprieve, with minutes from the Fed's July meeting revealing that the central bank discussed tapering off stimulus by the end of 2021,despite the Covid-19 pandemic, which has seen a surge in cases due to the delta variant. That pessimism lingered on Thursday, with the Dow nabbing its third-straight daily drop as the Fed's comments continued to haunt Wall Street. However, first-time jobless claims reached a new pandemic-era low, injecting some positivity into the markets. The three major benchmarks staged a rebound on Friday, with big-name tech stocks paving the way, though at last check all three were still pacing for considerable weekly losses.

Retail Sector Stars on Earnings Docket

The retail sector was undoubtedly the star of the show this week. Options traders rushed to Walmart (WMT) ahead of its second-quarter earnings report, anticipating it to post higher sales as back-to-school shopping makes a comeback. Home Depot (HD) also saw an unusual amount of options activity, after it posted a same-store sales miss. Meanwhile, Buckle (BKE) stood out as one small-cap stock not to be overlooked. Lowe's (LOW) also stepped into the earnings confessional with a beat-and-raise, while Foot locker (FL) hiked dividends just days before its own earnings event. Kohl's (KSS) was yet another name with impressive earnings results, alongside Petco (WOOF), which earned bull notes after raising its full-year guidance. To wrap up the week, retail behemoth Macy's (M) scored a 2-year high after several analysts chimed in with praise.

Tech Stocks Making Moves

Investors also had a slew of tech news to unpack this week. Seagate Technology (STX) kicked off the week with an upgrade, while Paysafe (PSFE) received a barrage of bear notes after posting an earnings miss and announcing a $441 million cash deal to buy SafetyPay. Semiconductor name Nvidia (NVDA) made headlines, as it cooled off ahead of its second-quarter earnings call. BlackBerry (BB) was able to brush off the controversy around its QNX software, however, with an upgrade from Canaccord Genuity. Elsewhere, options traders blasted Cree (CREE) as the stock tumbled.

Some other major names attracted attention as well. Specifically, Cisco (CSCO) was also getting blasted in the options pits, after its current-quarter profit forecast came in below estimates. There was also Apple (AAPL), which received a bull note from J. P. Morgan Securities. Market newbie Robinhood (HOOD) spooked traders, though, after issuing a growth warning. Options bears were quick to pile on on DoorDash (DASH), after SoftBank sold its stake in the company. Salesforce.com (CRM) had better luck, earning a new bull note ahead of next week's quarterly results. Plus, Adobe (ADBE) scored a fresh record high on its latest acquisition.

August Charges Forward with Retail Earnings, Data

Investors can expect plenty of economic data next week, though the earnings docket looks quieter, as the earnings season continues to unwind. Still, a decent amount of big companies have yet to report their results, including Abercrombie & Fitch (ANF), Best Buy (BBY), Dick's Sporting Goods (DKS), Dollar General (DG), Dollar Tree (DLTR), JD.com (JD), Palo Alto Networks (PANW), Peloton (PTON), Salesforce.com (CRM), Snowflake (SNOW), Ulta Beauty (ULTA), Urban Outfitters (URBN), and Williams-Sonoma (WSM). In terms of data, the Markit manufacturing purchasing managers' index (PMI) is due out, in addition to new and existing home sales, personal income, and consumer goods data. Until then, keep an eye on credit investors and figure out why options traders are now loading up on junk bonds.