Yahoo (YHOO) Front-Month Calls Active

by Houghton and Atkeson 10/30/08

Yahoo! (YHOO) is up today partly because of renewed takeover chatter circulating.

The YHOO Nov 13 (YHQKM) and 16 (YHQKQ) Calls are being heavily traded –- 23,000 contracts combined.

Is this just another false start or is there some fire accompanying this fire?

Looking into June, the market should begin refocusing on upcoming earnings reports for evidence the economy is gaining momentum.

In the short-term, the government's bond auction is likely to be a key driver of stocks.

The Treasury's auction of two-year notes brought an upside surprise which should alleviate fears of a lack of demand for U.S. paper.

The credit market, a reliable indicator of equity direction, suggests we will break out of the SPX's trading range to the upside.

The market seems to be saying that a 30% move up from the lows is ahead of the real economy and the market needs to allow the economy to catch up.