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Futures Near Morning Highs; Gold Spikes Again

U.S. stock futures are up as Europe is trading up 1 to 2 percent. The put/call ratio at the close yesterday was 1.28—meaning 1.28 puts bought for every call—fairly high. This is a contrarian indicator, as it represents stock that needs to be bought back eventually. What does it mean? It means traders are either getting short or hedging their long positions.

Gold up another $18 to $1,238, another new high; rather remarkable that it continues to go up even as the dollar continues to rise. But the weak euro has forced euro holders to find a place for their money; while some is going into the dollar, others are clearly opting to put the money into gold.

Gold stocks like AUY are even showing up on the most active trading lists prior to the open.

Of course, bulls insist European business will get better because of the weaker euro; but everyone is debasing their currency and this cannot continue indefinitely.

Indeed, even veteran traders have been surprised that the ECB will now begin buying (monetizing) sovereign debt, something that is historically inflationary.

"It's no longer 4 balls and 3 strikes," one trader said to me this morning. "In the new game, they keep pitching until you get a hit."

Elsewhere:

1) Macy's the first retailer to report Q1 earnings(most are on April quarters), reported earnings of $0.05, a penny ahead of consensus; guidance was recently raised from $0.00 to $0.02-$0.04. First quarter sales were up 5.5 percent.

They reaffirmed full year guidance of $1.75 to $1.80, which was raised on April 27. The company said it was "premature" to raise guidance further.

2) The Walt Disney Company falls 3 percent despite beating earnings estimates ($0.48 vs. $0.45 consensus). While revenues also topped expectations, operations were a mixed bag for the media and entertainment company.

With nearly $1 billion in worldwide grosses, the company's blockbuster film "Alice in Wonderland" helped propel its movie studio to a strong Q2. However, results at Disney's television division disappointed analysts, as lower ad rates continued to hurt the ABC network. Meanwhile, profits from its U.S. theme parks were flat as higher ticket prices (fewer discounts) offset lower attendance.

3) Ruby Tuesday rises 4 percent after Credit Suisse upgraded the restaurant chain to "outperform" due to improving sales trends. The firm's price target was also raised by $1 to $14.

4) The Mortgage Bankers Association reported a 3.9 percent rise in mortgage applications last week as 30-year fixed mortgage rate fell below 5 percent again to 4.96 percent. However, the increase in applications was a result of a strong boost in refinancing applications (up 15 percent), which overshadowed a 9.5 percent drop in mortgage applications to purchase a home—not surprising given the homebuyer tax credit expired at the end of April

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