Blue Chips Dominate as Apple Inc. (AAPL) Drags Down Tech Sector


"In a rare move, blue chips took the lead today," observed Schaeffer's Senior Technical Strategist Ryan Detrick, CMT. After two days of triple-digit gains, the Dow Jones Industrial Average (DJI) made it three in a row, closing at its intraday high after spending the entire session in the green. "September is off to its best start since 2010, and traders are anxiously awaiting next week's Fed decision on interest rates and more importantly, what they will do about the bond-buying program. Do they taper? By how much? These questions could lead to some volatility and skittishness over the next few days."

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

  • What sentiment indicators Schaeffer's Senior Trading Analyst Bryan Sapp is watching "in the short term," and why.
  • Schaeffer's contributor Adam Warner weighs in on the likelihood of a new record for the iPath S&P 500 VIX Short-Term Futures ETN (NYSEARCA:VXX).
  • How Wall Street reacted to the new product offerings from Apple Inc. ( AAPL ).
    President Obama opts to pursue alternatives to military action, Verizon Communications ( VZ ) makes history, and two tech names fall in sympathy with Apple.

The Dow Jones Industrial Average (DJI - 15,326.60) posted another triple-digit gain and finished at its intraday peak, up 135.5 points, or 0.9%. The 26 rallying Dow names were paced by International Business Machines ( IBM ), which gained 2.2% on the day. JPMorgan Chase ( JPM ) and Intel ( INTC ) each logged a 0.8% loss, and AT&T (T) and Hewlett-Packard (HPQ) were unchanged.

The S&P 500 Index (SPX - 1,689.13) spent much of the morning in negative territory, but eked out a modest rally of 5.1 points, or 0.3%, keeping its winning streak alive at seven sessions. The Nasdaq Composite (COMP - 3,725.01) , conversely, was dragged into the red by Apple and other names, closing with a loss of 4 points, or 0.1%.

The CBOE Market Volatility Index (VIX - 13.82) continued its decline, ending the day beneath its 50-day moving average (and south of 14) for the first time since Aug. 23. By the time the dust settled, the VIX had surrendered 0.7 point, or 4.9%.



A Trader's Take :

"The story stock of the day was Apple Inc. ( AAPL ) -- it had a big down day and held back the Nasdaq," noted Detrick. "In the end, this was a perfect example of how sentiment works. Coming into the hyped iPhone event, calls were very active and hopes were high for the stock. Well, the prices of their phones didn't excite the masses, and they didn't sign an expected deal with China Mobile. Those lofty expectations set a high bar and sure enough, the 'bad news' led to heavy selling."

3 Things to Know About Today's Market :

  • Verizon Communications ( VZ ) priced its well-publicized bond offering at $49 billion, making it the largest offering of corporate debt on record. The telecom giant plans to use the proceeds to help acquire sole control of its wireless division. (CNBC)
  • In a speech to the nation last night, President Barack Obama outlined plans to postpone a congressional vote on launching military action against Syria. Instead, the U.S. will work toward a Russian-led plan to eliminate Syria's chemical weapon supply. (The New York Times)
  • Wholesale inventories rose by 0.1% in July, noted the Commerce Department. Results were shy of the 0.3% increase expected by economists, but marked the first gain in four months. (Bloomberg)

5 Stocks We Were Watching Today :

  1. Put traders descended upon QUALCOMM (QCOM) options pits, as the stock dropped in sympathy with Apple.
  2. Also falling along with AAPL was Cirrus Logic (CRUS) , which saw its short-term put options in high demand.
  3. Lululemon Athletica (LULU) has seen a spike in volatility -- and options volume -- ahead of its quarterly earnings report.
  4. Short-term put buying was notable in Ford (F) today, and may have been shareholders hedging their bets.
  5. An options bull kept the faith on Linn Energy (LINE) , as news emerged regarding the company's buyout proposal for Berry Petroleum (BRY).


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



Commodities :

After two days in the red, crude futures moved higher today, as oil watchers weighed continued tension regarding Syria against a smaller-than-projected pullback in weekly crude stockpiles. By the close, October-dated crude had gained 17 cents, or 0.2%, to settle at $107.56 per barrel.

Gold, however, ended fractionally lower on the day, amid continued speculation about what next week's Federal Reserve meeting will mean for the central bank's current bond-buying efforts. December-dated gold futures gave back 20 cents to close at $1,363.80 an ounce.


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

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

This article appears in: Investing , Options

Referenced Stocks: AAPL , IBM , INTC , JPM , VZ

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