Buyers Return to the Fray After Crimea Vote; Dow Adds 182 Points

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"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.

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

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The 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. ( IBM ) setting the pace, up 2%. The worst performer, relatively speaking, was McDonald's Corporation ( MCD ), which advanced 0.02%.

The 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%.

The 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.

CLOSING SUMMARY - INDICES

CLOSING SUMMARY - NYSE AND NASDAQ

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 trend."

5 Items on Our Radar Today :

  1. 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 powered higher in March on a month-over-month basis, though at a slower rate of expansion than economists had projected. (Reuters, via CNBC)
  2. 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. (USA Today)
  3. 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 conditions. (USA Today)
  4. Yahoo! Inc. ( YHOO ) was targeted in the options pits today, following news that Alibaba Group will hold its initial public offering in the U.S.
  5. Who won this week's Brand Face-Off between agricultural equipment giants: Deere & Company (DE) or Caterpillar Inc. (CAT) ?

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 :

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 per barrel.

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 ounce.

SCHAEFFER'S MARKET POSTURE



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This article appears in: Investing , Options

Referenced Stocks: ZNGA , SWHC , YHOO , IBM , MCD

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