Teen Time Out: Tween Brands, Quiksilver, Skechers
by Houghton and Atkeson 09/23/08Although teenagers generally don't own homes, are they feeling the pinch of an economic slowdown? Apparently, option traders believe this to be the case.
As we review our proprietary option scans this morning, Tween Brands (TWB) -- whose brands include Limited Too and Justice -- Quiksilver (ZQK) -- which is focused on surf, ski, snowboard and skateboard markets -- and Skechers USA (SKX) -- which features urban/street focused footwear -- appear in the top 15 securities on the list.
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Given that our option systems look at all equities with options trading on them, this is an unusually high representation of a single sector at the top of the list.
In looking more closely at the trades, they involve large-scale call selling and bear-put spreads. It appears that option traders believe teens may take a time-out when it comes to shopping.
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Looking into June, the market should begin refocusing on upcoming earnings reports for evidence the economy is gaining momentum.
Watching the Treasury's Actions
In the short-term, the government's bond auction is likely to be a key driver of stocks.
Treasury Auction Boosts Market
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.
Credit Markets Point to Upturn
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.
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