Where Have All The Family Dollars (FDO) Gone?
by Houghton and Atkeson 09/24/08
Family Dollar Stores, Inc. (FDO) is scheduled to report earnings next week on Friday before the market open.
With earnings a little over a week away, option investors are buying about 7,500 contracts of the FDO Nov 25 (FDOVE) and 22.50 (FDOVX) Puts.
The stock is up about 40% year-to-date on strong fundamentals. Is this a warning that those fundamentals are eroding or is it a simple case of hedging long positions?
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We are taking notice of these trades today because in the past, when puts were sold, the stock went up. Today, puts are being bought. It seems as if this put trader knows what he is doing.
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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.
