Ahead of the Fed, Markets Finish North of Breakeven

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"Today's action wasn't spurred by any particular drivers," observed Schaeffer's Senior Trading Analyst Bryan Sapp. "Volumes were light, and trading was very muted, which was largely a result of tomorrow's big Federal Open Market Committee (FOMC) meeting and policy update. What Fed Chairman Ben Bernanke says will likely cause a big move in stocks, and it's very probable that everyone is holding tight for the time being." Meanwhile, the Dow Jones Industrial Average (DJI) finished another session in positive territory, and came within striking distance of its all-time high.

Continue reading for more on today's market, including :

  • As the FOMC wraps up the first half of its two-day meeting, Sapp reiterates his expectations for "some serious volatility" over the next two sessions.
  • In his latest Chart of the Day , Schaeffer's Senior Options Strategist Tony Venosa, CMT, highlights nine reasons why Transocean ( RIG ) could be due for a pullback.
  • One neutral-to-bullish speculator targeted this outperforming automobile concern by utilizing front-month options.
plus...
    The consumer price index (CPI) advanced in August, Microsoft ( MSFT ) had good news for shareholders, and Citigroup ( C ) was hit with a price-target reduction.

The Dow Jones Industrial Average (DJI - 15,529.73) spent the entire session in the green, and touched an intraday peak of 15,555.07 around 1:00 p.m. ET, which was about 103.4 points away from its all-time high. By the close, the blue-chip barometer pared some of its earlier gains to finish 35 points, or 0.2%, higher. Alcoa ( AA ) led the Dow's 19 advancers with a gain of 2%, while UnitedHealth ( UNH ) paced the 11 decliners with a loss of 1.1%.

The S&P 500 Index (SPX - 1,704.76) powered north at the start of the session, as well, and traded sideways for much of the afternoon. By day's end, the SPX added 7.2 points, or 0.4%, to overcome the 1,700 mark. Meanwhile, the Nasdaq Composite (COMP - 3,745.70) advanced 27.9 points, or 0.8%.


The CBOE Market Volatility Index (VIX - 14.53) spent a brief period of time in negative territory this morning, but ended up closing 0.2 point, or 1%, higher.

CLOSING SUMMARY - INDICES

CLOSING SUMMARY - NYSE AND NASDAQ

A Trader's Take :

"The best thing about today's market was that, despite small moves in the indexes, many momentum names continued to offer a great deal of opportunity for short-term traders," Sapp continued. "A few big names that were on the move today were Facebook (FB), 3D Systems (DDD), Apple (AAPL), Pandora Media (P), Angie's List (ANGI), Sears (SHLD), and Caesars Entertainment (CZR). Since correlations remain very low, there are still ample opportunities on individual names, even when the market isn't doing much."

3 Things to Know About Today's Market :

  • The Labor Department said its consumer price index (CPI) climbed by a seasonally adjusted 0.1% in August, matching the consensus view. Core prices -- which exclude food and energy costs -- also rose by 0.1%. On a year-over-year basis, overall consumer prices increased by 1.5% last month, down from the 2% gain in July. (MarketWatch)
  • The NAHB/Wells Fargo Housing Market Index remained unchanged at 58 in September, after four consecutive monthly gains. Economists, on average, were expecting a reading of 59. The index's lack of movement was attributed to a rise in 30-year mortgage rates. (CNBC)
  • Microsoft ( MSFT ) revealed plans for a $40-billion share repurchase program today, while also raising its dividend by 22%. The software giant will now pay a 3.4% dividend yield, compared to the 2.7% yield paid by Apple (AAPL). The latest buyback program has no expiration date. (CNN Money)

5 Stocks We Were Watching Today :

  1. Despite yesterday's advances in the financial sector, Citigroup ( C ) was slapped with a price-target cut at Goldman Sachs this morning.
  2. Visa (V) -- which is scheduled to become a DJI component after Friday's close -- received some bullish attention from front-month traders.
  3. Put players have been descending upon on Barrick Gold (ABX) in droves lately, despite the stock's recent trek higher on the charts.
  4. Take-Two Interactive's (TTWO) long-awaited video-game release did little to impress short-term speculators, who purchased October-dated puts.
  5. One strategist scooped up Bank of America's (BAC) November options to wager on a significant near-term move for the financial giant.

EARNINGS

For a look at today's options movers and commodities activity, head to page 2.

STOCKS - NOTABLE CALL ACTIVITY

STOCKS - NOTABLE PUT ACTIVITY

Commodities :

Crude futures fell for a third straight day, as further signs of easing tensions in Syria drove prices lower. By the close, October-dated crude lopped off $1.17, or 1.1%, to end at $105.42 per barrel -- its lowest finish in nearly a month.

Meanwhile, gold futures also declined, as investors await the FOMC's latest policy statement. Gold for December delivery dropped $8.40, or 0.6%, to finish at $1,309.40 an ounce.

SCHAEFFER'S MARKET POSTURE



The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

All Rights Reserved. Unauthorized reproduction of any SIR publication is strictly prohibited.


This article appears in: Investing , Options

Referenced Stocks: AA , C , MSFT , RIG , UNH

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