U.S. stock futures are trading broadly higher this morning, as Wall Street kicks off the fourth quarter in bullish style. Despite the major market indices trading near all-time highs, investors appear keen to get in on stocks heading into the holiday shopping season.
Meanwhile, a trio of economic reports are due out later this morning. A pair of September manufacturing reports from Markit and the Institute for Supply Management will hit just after the opening bell, followed by August data on construction spending.
Against this backdrop, futures on the Dow Jones Industrial Average are up 0.21%, S&P 500 futures have added 0.15% and Nasdaq-100 futures are higher by 0.20%.
In the options pits, the third quarter of 2017 closed out with moderate volume as about 15.1 million calls and 15.3 million puts crossed the tape. On the CBOE, the single-session equity put/call volume ratio rose to 0.59, while the 10-day moving average dipped to 0.64.
Taking a closer look at Friday’s volume, Micron Technology, Inc. (NASDAQ:MU) broke out to 15-year highs on follow-through earnings action. Facebook Inc (NASDAQ:FB), meanwhile faces increased government scrutiny as it hands over Russia-linked ads. Finally, Alibaba Group Holding Ltd (NYSE:BABA) acquired a 10% stake in a Chinese supermarket amid its push into the grocery market.
Micron Technology, Inc. (MU)
In case you missed it, Micron Technology posted blowout fourth-quarter results last week. The company said it earned $2.02 per share on revenue that rose 90.7% to $6.14 billion — both figured easily topped Wall Street’s expectations. MU stock surged higher as a result, and the shares are now trading at 15-year highs.
MU options traders were hot on the stocks heels, with volume soaring to 368,000 contracts on Friday — easily doubling MU’s daily average. Furthermore, calls made up 71% of Friday’s activity, indicating an extremely bullish slant to MU’s options volume. Turning to the front-month October series, we find that short-term MU options traders are quite bullish.
In fact, the October put/call open interest ratio currently rests at 0.53, with calls nearly doubling puts among options set to expire later this month. Currently, peak October call OI totals 116,000 contracts at the just overhead $40 strike. Given MU’s momentum, the stock could take out this strike later this week.
Facebook Inc (FB)
FB stock has bounced back from the recent tech selloff in style. The shares are once again back above key support at $170, despite growing scrutiny from the U.S. government regarding Russia-back election ads. Facebook is expected to hand over those ads to Congress later today.
Despite this growing controversy, FB stock remains a hot pick for investors. Even options traders are betting on a continued run higher for FB stock. On Friday, volume topped 298,000 contracts, with call’s making up 64% of the day’s take — returning call activity to normal following a week of heavy bearish activity and profit taking.
Looking at short-term October options, the put/call OI ratio has risen in the past week to a near-term high of 0.74. It’s clear last week’s tech selloff had a negative impact on FB sentiment, but the stock’s rebound back above $170 should help clear up this negativity, and help boost FB stock higher.
Alibaba Group Holding Ltd (BABA)
Alibaba remains a growth machine. Looking to expand its reach further in its home market, Alibaba snapped up a 10% stake in New Huadu Supercenter, a brick-and-mortar grocery store in southern China. Additionally, Alibaba said it is scouting locations for a second European data center as it ups the ante in cloud services against Amazon.com, Inc. (NASDAQ:AMZN).
BABA options traders remained bullish following the news. Overall, BABA volume topped 167,000 contracts, with calls snapping up 61% of the day’s take. That said, the October put/call OI ratio rose last week to 0.81, as options traders fretted over a pullback from resistance near $180.
BABA stock is now consolidating into support near $170 as its 50-day moving average rises into the area. Given BABA’s run so far this year, another turn higher should be just around the corner with the holiday shopping season on its way.
As of this writing, Joseph Hargett did not hold a position in any of the aforementioned securities.
