Goldman Beats Options Bears as S&P 500 Rallies Most Since March

Discussion in 'Wall St. News' started by ASusilovic, Jul 16, 2009.

  1. July 16 (Bloomberg) -- Rising retail sales and record profits at Goldman Sachs Group Inc. are outweighing insider selling and bearish stock-options bets as the Standard & Poor’s 500 Index stages its biggest rally in four months.

    The benchmark gauge for U.S. equities climbed 3 percent yesterday to complete the steepest three-day advance since March. Retail sales rose 0.6 percent last month, topping the 0.4 percent estimate of economists surveyed by Bloomberg. Goldman Sachs reported earnings of $3.44 billion. Intel Corp. said third-quarter sales will be up to 13 percent higher than analysts predicted.

    As recently as four weeks ago, money managers said the longest streak in net stock sales by corporate insiders in two years, the biggest gap between the cost of bullish and bearish stock options since August 2008 and rising unemployment would drive the S&P 500 down. The index, which fell 38 percent in 2008 and another 25 percent in the first two months of the year, is now up 3.3 percent for 2009.

    “The human desire for hope springs eternal,” said Peter Sorrentino, who helps oversee $13.8 billion at Huntington Asset Management in Cincinnati. “Some of this is over-complacency by people who sat out way too long.”

    Sorrentino said he hasn’t sold an options position that pays off if the S&P 500 slips to 775 in December, a 17 percent decrease from yesterday’s close. He said two weeks ago that he expected the index to fall more than 10 percent from its July 2 price of 896.42.

    Pessimism is a good source for futher stock market gains...
  2. ...until it isn't :cool: