Bulls just not in the buying mood despite positive economic and earnings news. Data on jobless claims and productivity were better than expected and Cisco (CSCO) reported strong earnings results. This follows the Fed statement from Wednesday that hinted at low rates for an extended period of time. Traders are also digesting same-store sales results for October from the nation's chain stores. With the employment report due out tomorrow, traders could be a bit cautious today.

Cisco shares are up nearly four percent in early trading following the company's earnings report last night. The networking giant beat earnings estimates by 5-cents a share with revenues above expectations as well. However, revenues were down 12.6 percent year on year. Cisco's board also approved a $10 billion addition to its stock buyback program. Cisco shares near their 52-week high of $24.82 and have gained more than 30 percent in the past year.

Retailers have reported mixed same-store sales results so far this morning. Costco (COST) announced that same-store sales rose 5.0 percent with the weak U.S. dollar also benefiting international sales. Other retailers that topped expectations included Walgreens (WAG) and Children's Place (PLCE). Teen retailers struggled with the teen unemployment rate hurting sales. With Wal-Mart (WMT) not providing monthly results, traders tend to focus on Target (TGT), which saw a decline of 0.1 percent, matching estimates.

Jobless claims fell by 20,000 the week ending Oct. 31 to a level of 512,000. The four-week moving average fell by just 3,000 to 523,750, but claims are down about 25,000 from figures in late September. Continuing claims for the prior week fell by 68,000 to 5.886 million, which is the seventh straight week of declines.

Productivity in the third quarter soared, rising 9.5 percent compared with estimates for growth of 6.3 percent. Employers are squeezing more and more out of their employees, but this can't last forever. Unit labor costs fell 5.2 percent, which was larger than expected. The dichotomy of the situation is that high productivity benefits profits, but is actually hurting those looking for new jobs.

Expectations are for nonfarm payrolls to fall by 175,000 in October, which would be a solid improvement from the 263,000 jobs lost in September. The Monster Employment Index showed improvement in October, rising a point to 120. This report shows job demand on Internet job posting sites.

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

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