Stocks open slightly lower as traders digest economic news out of China and weekly jobless claims. Economic news has been light this week, but the bulls have been able to keep stocks in the black. Trading is likely to remain light Thursday, but this could change Friday when data on retail sales is released. Next week's FOMC meeting might be a catalyst for stocks, though traders might be waiting for second quarter earnings.

Jobless claims for the week ending March 6 fell by 6,000 to a level of 462,000. This was slightly worse than expectations with the four-week moving average rising by 5,000 to 475,500. We need to see claims much lower for payrolls to show solid gains. Continuing claims for the prior week were disappointing, rising by 37,000, putting the four-week moving average at 4.581 million.

China announced that inflation rose to a 16-month high, which has raised concerns that its monetary leaders will tighten further. Consumer price inflation rose 2.7 percent, easily beating estimates for a rise of 2.3 percent. Despite this news, indices in Asia managed mild gains. However, shares in Europe are trading lower in afternoon action, which could be a foreshadowing of trading the U.S. Thursday.

One positive for the bulls has been the recent pick up in merger activity. This continued Thursday with Devon Energy (DVN) announcing it will sell assets in Brazil, the Gulf of Mexico and Azerbaijan to BP (BP) for $7 billion. This news has pushed DVN shares higher by 2.5 percent in early trading with BP down a third of a percent.

In earnings news, both Hot Topic (HOTT) and the Men's Wearhouse (MW) are reported results, but the news has taken these stocks lower. HOTT saw its income fall to 18-cents a share in the fourth-quarter from 32-cents in the year ago period. MW lost 36-cents in the quarter, down from a profit of 3-cents in the year earlier period. HOTT shares are down more than 4 percent in early trading with MW off 6 percent.

The markets are looking for a catalyst that will provide increase volumes and define a trend. The bulls have been able to keep stocks to the upside, although volumes have been light and the fear indices have fallen to support. However, the CBOE Market Volatility Index (VIX) has risen slightly the past few sessions even as stocks have gained ground. This is a positive sign, but the VIX remains near support, which led to a 7 percent decline in stocks when this level was hit back in January.

Jody Osborne
Senior Staff Writer & Options Strategist
Optionetics.com ~ Your Options Education Site

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