"News from Crimea didn't rock the boat, and in the end, stocks
rallied significantly," summarized Schaeffer's Senior Technical
Strategist Ryan Detrick, CMT. "We noted late last week how fearful
option traders were getting. Whether it was huge calls on the CBOE
Volatility Index (VIX) being traded, or option traders willing to
pay a very high premium for near-term positions -- versus what they
had paid in the past -- there were signs of some real fear. As
we've seen time and time again over the past few years, once
everyone gets worried, that could be the exact time to buy. That
looks to be the case once again." With that being said, the
Dow Jones Industrial Average (DJI)
bounced higher out of the gate today, eventually settling with a
triple-digit gain to win back 1.1% of last week's loss.
Trading Topic of the Week
Continue reading for more on today's market, including
-- How to Get Started with Options:
Study the lingo
. Even if you have a strong background in stock trading, you need
to learn options-specific phrases such as
sell to open
-- and many more.
Dow Jones Industrial Average (DJI - 16,247.22)
broke its five-day losing streak in a big way, adding 181.6 points,
or 1.1%. All 30 Dow components closed higher on the day, with
International Business Machines Corp. (
) setting the pace, up 2%. The worst performer, relatively
speaking, was McDonald's Corporation (
), which advanced 0.02%.
S&P 500 Index (SPX - 1,858.83)
also rallied higher out of the gate, ultimately closing with a gain
of 17.7 points, or 1%. This move lifted the index back above its
20-day moving average as well as the critical 1,850 level, and
placed it back in positive territory for 2014. Also gaining ground
was the tech-rich
Nasdaq Composite (COMP - 4,279.95)
, which advanced 34.6 points, or 0.8%.
CBOE Volatility Index (VIX - 15.64)
took a tumble amid the broad-market strength, shedding 12.2%, or
2.2 points, on the day. The market's "fear gauge" is now back south
of the 16 level, but remains above its 10-day moving average.
A Trader's Take
"After a 2% drop last week, the bulls came out swinging today,"
noted Detrick. "Financials and tech both had nice days, continuing
a recent trend from the two significant groups. The fact the SPX
could close above the 1,850 area is also significant. Remember,
that level was resistance earlier this month, then was quickly
violated last week. Now the bulls have pushed the index back above
this area. We call this a bear trap. Bears were very confident and
feeling pretty good once this region gave way. Now that it's
sitting back above the round-number level, the bulls are again in
charge, and all the bears are feeling the pain. Don't forget that
this is expiration week, and historically those are bullish as
well. After one day, it is looking good for a continuation of that
5 Items on Our Radar Today
- Industrial production
rose by 0.6% in February
, topping economists' expectations. Capacity utilization,
meanwhile, rose to 78.8% from 78.5% the previous month.
Elsewhere, factory activity around New York state
in March on a month-over-month basis, though at a slower rate of
expansion than economists had projected.
(Reuters, via CNBC)
- The people of Crimea lived up to expectations over the
weekend and voted to secede from Ukraine to become part of
Russia. In response, President Barack Obama
set forth sanctions
against seven Russian officials for their role in the situation.
The European Union also announced travel restrictions and asset
freezes for 21 individuals. While the list of 21 has not yet been
made public, there is likely overlap between the two groups.
- The National Association of Home Builders/Wells Fargo index
measuring homebuilder sentiment edged up 1 point to 47 this
month, from February's reading of 46. Readings below 50 are still
suggestive of pessimism
, however, with regard to the group's outlook on sales
Yahoo! Inc. (
was targeted in the options pits today, following news that
Alibaba Group will hold its initial public offering in the
- Who won this week's
between agricultural equipment giants:
Deere & Company (DE) or Caterpillar Inc.
For a look at today's options movers and commodities
activity, head to page 2.
Oil futures shifted lower on Monday, as supply concerns
dissipated amid the completion of Crimea's referendum. By the
close, April oil futures had slipped 81 cents, or 0.8%, to $98.08
Gold took a breather today, as equities gained ground, ending
the precious metal's winning streak at five sessions. The April
contract logged a drop of $6.10, or 0.4%, to close at $1,372.90 an
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