Almost all of the significant options trades yesterday involved buying calls. There was unusual call buying in Schluberger (SLB), Achillion Pharmaceuticals (ACHN) and Smithfield Foods (SFD). SLB is scheduled to report earnings on Friday, pre-market. There has been steady bullish flow in Qualcomm (QCOM) over the past week. In the ETFS, there was bullish flow in the iShares Russell 2000 (IWM) and bearish flow in Gold (GDX) and materials (XLB).
The options market is making every indication that bull trend in U.S. equities, and particularly small cap growth is likely to continue. Small caps have outperformed large cap stocks by 325 basis points (bps) month-to-date. Analysts are expecting an acceleration in growth in the U.S. economy. Small caps are sensitive to this and have light foreign exposure.