"The bears had their chance early, but in the end, the bulls
once again took charge," summarized Schaeffer's Senior Technical
Strategist Ryan Detrick, CMT. The
Dow Jones Industrial Average (DJI)
ended on a high note, closing near its intraday peak after marching
steadily north during the second half of the trading day.
Continue reading for more on today's market, including
- Inertia at the Bank of England, bullish trading in Netflix (
), and a forest-for-the-trees take in our Tweet of the day.
After a fleeting trek below breakeven in late-morning trading,
Dow Jones Industrial Average (DJI)
powered higher the rest of the day, closing just off its intraday
peak with a gain of 81 points, or 0.6%. The Dow is now fewer than
200 points away from overtaking its October peak. The index's rally
was far-reaching, as 25 of the 30 components powered higher on the
day. Pacing the advancing majority was Bank of America (
), which bounded back from yesterday's backslide with a 3.1% gain.
On the flip side was Alcoa (
), which responded to a
with a 1.2% pullback.
S&P 500 Index (SPX)
got within a chip-shot of marking a new five-year high but settled
for a gain of 11 points, or 0.8%. The
Nasdaq Composite (COMP)
slightly lagged its index brethren, advancing 16 points, or
CBOE Market Volatility Index (VIX)
avoided another multi-year low but did close off 0.3 point, or
2.4%, slightly off its intraday low of 13.33.
A Trader's Take
"Although there wasn't any one major driver on the day, we took
another step in the right direction," asserted Detrick. "You want
to see weakness early, followed by late-day buying. Plus, when
small-caps and mid-caps make new all-time highs, it can't be that
bad of a day. Also," Detrick added, "we are one day closer to
[Schaeffer's Senior Equity Analyst] Joe Bell's first-ever live
television appearance. He'll be on FOX Business Network tomorrow at
4:00 p.m. Eastern -- tune in and see how my boy does!"
3 Things to Know About Today's Market
- In a move that surprised very few, both the European Central
Bank (ECB) and the Bank of England left their key interest rates
unchanged at 0.75% and 0.5%, respectively. The latter also made
no adjustments to its quantitative easing program, which
currently stands at 375 billion pounds (roughly $604 billion). Of
the 64 economists polled by Reuters, not one expected the Bank of
England to change the interest rate or its commitment to the
current stimulus program. Meanwhile, ECB President Mario Draghi
was cautiously optimistic before the press, noting, "Several ...
indicators have broadly stabilized ... and financial market
confidence has improved significantly."
- The Labor Department said initial jobless claims in the U.S.
rose 4,000 to a seasonally adjusted 371,000 last week,
disappointing economists who were expecting the number to retreat
to 363,000. The number of continuing unemployment claims,
meanwhile, did decline by 127,000 to 3.1 million, hitting a
4.5-year low. Elsewhere, wholesale inventories rose 0.6% in
November to a seasonally adjusted $498.95 billion, the Commerce
Department reported. This exceeded economists' expectations for a
0.3% rise, and marked the fifth consecutive increase in wholesale
- The whiplash isn't over for Herbalife (HLF) watchers.
Hedge-fund manager Daniel Loeb
to the troubled company's rescue, taking a more than 8% stake in
the company late Wednesday. Meanwhile, the firm's president
appeared on CNBC this morning to refute activist investor Bill
Ackman's harsh claims that the company is no more than a "pyramid
scheme." After a flirtation with positive territory this morning,
the stock settled modestly lower, off its intraday lows.
... The 2013 Oscar nominations were released today, and "Lincoln"
led the way with 12 Academy Award nods, including best picture,
best director for Steven Spielberg, and best actor for Daniel
Day-Lewis, who tackled the titular role. Among the most
included directors Kathryn Bigelow, Quentin Tarantino, and Ben
Affleck (for "Zero Dark Thirty," "Django Unchained," and "Argo,"
respectively), and -- once again -- Leonardo DiCaprio for his
villainous turn in "Django."
Today's Top Tweet
"...while the indices are consolidating, take advantage of
individual stocks. You have to put in the work to find them."
(Joseph Fahmy), 2:23 p.m.
5 Stocks We Were Watching Today
- Facebook (FB) saw a surge in
bullish options volume
, as speculators bought calls and sold puts.
- Netflix (
) saw a rush of
weekly options activity
as bullish speculators gambled on a short-term pop higher.
- Short-term Intel (INTC) speculators
placed bets against
the semiconductor name's recent uptrend.
- ARM Holdings (ARMH) was
targeted by put buyers,
despite its recent visit to a new multi-year high.
- Microsoft (MSFT) was
downgraded this morning
at Morgan Stanley.
Question of the Day
: What happens if the put I purchased is in the money when it
: Any option that is in the money by $0.01 or more is automatically
exercised by the Options Clearing Corporation (OCC), unless you
notify your brokerage firm otherwise. If you have bought a put and
are automatically exercised, you will be required to deliver the
shares from your account at the strike price. If you do not own the
underlying stock, as many put buyers do not, your broker will add a
short stock position in your account. This open short position
leaves you vulnerable if the stock opens higher on Monday. The
situation becomes even more complicated if you do not have the
funds in your account required to buy the shares. In nearly all
cases, you are better selling the option outright ahead of
For a look at today's options movers and commodities
activity, head to page 2.
February crude futures advanced on Thursday, adding 72 cents, or
0.8%, to close at $93.82 per barrel. February gold futures ended
the day higher as well, tacking on $22.50, or 1.4%, to settle at
$1,678 per ounce.
At the end of every market day, the staff at Schaeffer's
Investment Research reviews the trading day in detail, covering
major events and key market developments. Don't miss this
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