January 28, 2015 Midweek Recap

The equity market got slammed today despite Apple Inc. posting a great quarter last night, and trading nearly 6% higher today. Over the last two days of trading, the S&P 500 is down nearly sixty points. Opening at 2054 on Tuesday and closing at 1993.75 today. Apple is a large component of the Nasdaq, however, even with it’s up move, the index closed negative.

To no surprise, the VIX surged higher today. It closed above the 20 mark, good for nearly a 19% move. The VIX has closed above 20, six times this month. Not only that, but it’s had six +/- 10% days this month. Clearly, it feels like volatility is back.

Crude Oil continues to hang around it’s 52-week lows. In fact, the United States Oil Fund, USO, hit a 52-week low today. USO closed at at $16.56, down nearly four percent.

Earlier this afternoon, the Federal Reserve announced that they would be leaving the federal funds rate between 0% to 0.25%. In addition, they mentioned that they would be monitoring international developments. Some Fed followers believe that they were referring to the volatility in the US Dollar. Several companies have mentioned weakness this quarter due to international currencies depreciating against the dollar.

In fact, Facebook mentioned that if it wasn’t for a strong dollar that their revenue would have risen by 53%, compared to 49%. At the time of this writing, FB is down $1.74 or 2.28% in the After hours.

Notable earnings still left this week include: PSX, HP, VLO, OXY, APD, DOW, POT, BRCM, GOOG, AMZN, V, WYNN, CVX and MA.

On the options front, we saw bullish options flow in II VI Incorporated, IIVI, which saw over 70 times normal call activity. The stock hit a 52-week high today after posting earnings yesterday. One trader came in and bought 1500 calls of the March 17.5 strike, for 65 cents when the options were trading 0.25 at .65. Clearly, a very aggressive buy.

If you recall, On January 22nd, we noted bullish option activity in POST, which exploded 4 days later, gaining over 16% on January 26, 2015.

In regards to economic events, traders will be looking at Jobless Claims tomorrow and GDP numbers on Friday.