The market has traded in a tighter range today, surprisingly, with the action favoring the bears.
Futures were pointing towards a lower open before the release of this morning’s Producer Price Index (PPI) and dipped a little further after disappointing the suit-and-ties. For May, PPI fell 1.0%, which was the biggest drop in nearly 3 years, and higher than the 0.9% drop that had been penciled-in. It was the second straight month PPI has fallen.
Meanwhile, Retail Sales fell for the second straight month and came in lower than expected for May, slipping 0.2%.
Much of Wall Street’s focus is on JPMorgan Chase (JPM, $34.75, up $0.98) and its CEO who is getting grilled by the zombies on Capitol Hill. Jamie Dimon is looking cool as a cucumber as he testifies to the Senate Banking Committee on the firm’s recent loss of $2+ billion in the derivatives market. The company announces earnings in mid-July so we should get a better picture on how much, or how little, the trading debacle had on the firm.
Shares of Arena Pharmaceuticals (ARNA, $8.32, up $0.43) are up another 5% and have cleared $8 ahead of the June 27 meeting with the FDA. We have been touting the company’s obesity drug, Lorcaserin, for a few years now and have two current option trades on Arena.
One trade that is a current play in our Daily is a directional call option that is up over 340%. Our other Arena trade is a covered call position we recommended for our Weekly Wrap when shares were under $2 back in early February. Some investors think covered call writing is boring and limits your gains but making over 110%, safely, on a biotech stock sure sounds exciting to us.
We have said Arena could be well positioned to take advantage of the rapidly growing global obesity market should the FDA approve the drug. We have also mentioned shares could trade to double-digits over the near-term and today’s high of $8.65 is making that price target a reality.
We have a lot more to cover inside our Members Area today so let’s get on it.
As we head into the second half of trading, the Dow is up 9 points to 12,583 while the S&P is higher by 2 points to 1,326. The Nasdaq is advancing 5 points to 2,846.