Macro Outlook

Finally, we have the word from the CBOE that WaveStrength Options Weekly readers have been waiting for regarding your Verizon Communications (VZ: NYSE) calls: 

“Monday, November 20, 2006, shall be adjusted as follows:

Well, that was obviously written by some strange lawyer/accountant hybrid (and that was the simple part of the announcement). Hopefully they are not breeding. 

I apologize for getting us tangled up in a minor headache like this, but it should all come out right in the end (and maybe even better than just alright). 

Basically, the IDEARC spin-off was delayed about 20 days. Come November 20, your options' prices should be corrected. 

I do still like the play and note that the options are being priced awfully low right now, considering that the strikes and values will be corrected shortly. 

A Barron's article released Friday suggests that with a change in control of the House of Representatives and the Senate comes support for drilling in the Outer Continental Shelf (OCS).

At first glance this seems counterintuitive, but when it comes to domestic energy supplies versus wars, you can bet the Democrats will choose to drill every time. 

 

While ANWR might still be off limits, I predict OCS drilling legislation will pass, and that will be a big boon for oil and gas producers and services alike. 

My two favorites are big names, Transocean, Inc. (RIG:NYSE) and Chevron (CVX:NYSE), but you can bet there will be others that will stand to gain from opening the OCS.

We'll discuss them this week.

Trading Tactics

As we kick off another trading week, the economic calendar is chock full of upcoming releases - and none of them look very promising. In fact, the early indication is that we'll see falling retail sales, falling prices and falling housing starts, all starting with the retail number due tomorrow. 

Tuesday: Retail Sales

Economists predict that retail sales dropped 0.3% in October after a 0.4% decline in September. Any down-move would be the third decline in the past five months.

Economists are expecting a second straight decline in consumer prices, as October is expected to be 0.3% decline after an 0.5% drop in September.

Friday: Housing starts

Starts are projected to fall another 4.5% to a seasonally-adjusted annual rate of 1.69 million in October.

As we know, the markets have been able to shrug off any negative news lately, but it'll be interesting to see how three potential news items, all projected to be negative, will affect that streak. 

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