Trading was active this morning as the S&P 500 took out old highs, but things are slowing heading into the long weekend. The S&P has traded in a rather narrow 8-point range and is up 2 points to 2090.48 heading into the final hour.

Treasury bonds are modestly lower ahead of housing data and the release of FOMC minutes in the middle of next week. The yield on the benchmark ten-year is nudging beyond 2%. Crude oil is up $1.47 to $52.68 and gold gained $8.5 to $1229.

Energy (XLE) is the hot sector as crude bubbles higher. Tech (XLK), healthcare (XLV), and basic materials (XLB) are also higher. Financials (XLF) and consumer staples (XLP).

Utilities (XLU) are spent the day behind the woodshed with another beating. XLU has now lost 7.1% month-to-date.

CBOE Volatility Index (.VIX) is off .09 to 15.25 and probing 2015 lows. Trading in the options market is running at its best levels so far this week. 7.9 million calls and 6.5 million puts so far.

Interestingly, defensive trading is being seen in two sector ETFs. For instance, 45,100 Mar 55 puts traded on the SPDR Industrials (XLI) today after more than 65,000 contracts were opened yesterday. Meanwhile, Market Vectors Semi ETF (SMH) Mar 55 puts have traded 55,000 contracts after 51,100 Mar 54 puts were opened on SMH yesterday.

To put these trades in perspective, since the multiplier for an ETF option is 100, a 55,000 lot controls 5.5 million shares. Therefore the big trades in XLI and SMH represent control of a boatload of shares and, since these investors are buying the puts to open new positions, the order flow is expressing concern about the outlook for these two economically-sensitive sectors.

In short (pun intended), some “smart money” players are hedging market exposure with downside March puts on some sector ETFs as the S&P 500 sets new highs.

That’s a wrap for this week. Enjoy the extended weekend. See you Tuesday!