Chop Continues, S&P 500 Loses 1% for the Week

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"The day ended a lot like the rest of the week played out, with a lot of volatility," observed Schaeffer's Senior Technical Strategist Ryan Detrick, CMT. "The Dow Jones Industrial Average (DJI) entered negative territory about an hour into the session, and it never looked back, ultimately closing near its lows of the day. Other than a big bounce on Thursday, this week was pretty ugly."

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

  • Schaeffer's Senior Trading Analyst Bryan Sapp defines the " bookends for price action " traders should monitor ahead of next week's Fed announcement.
  • Our Option Idea of the Week: Why Deckers Outdoor ( DECK ) looks ready to step higher , and how to trade the opportunity.
  • And, in case you missed it, Schaeffer's contributor Adam Warner shares some tips on optimizing your trading for the current market volatility.
plus...
    Producer prices increase, the IMF tweaks its outlook for the U.S., and Nokia ( NOK ) bulls emerge.

The Dow Jones Industrial Average (DJI) gave back more than half of yesterday's gains, dropping 105.9 points, or 0.7%, to close the week at 15,070.18. Just four of the index's 30 components gained ground today, as Verizon Communications ( VZ ) paced the advancers with a 0.9% uptick. Johnson & Johnson ( JNJ ) was unchanged on the day, and American Express ( AXP ) brought up the rear, down nearly 3%. Although the Dow did finish the week in the red by 1.2%, it was roughly 117 points above its intra-week low (and north of the 15,000 mark).

The S&P 500 Index (SPX) also suffered a setback, shedding 9.6 points, or 0.6%, to close at 1,626.73, which was back below its 10-day moving average. The tech-rich Nasdaq Composite (COMP) lost 21.8 points, or 0.6%, to 3,423.56. For the week, the SPX surrendered 1% while the COMP dropped 1.3%, the worst of the three major indexes.

The CBOE Market Volatility Index (VIX) popped higher today, up 4.5%, or 0.7 point, to close back above the 17 level, at 17.15. This week was a big one for the VIX, which surged by 13.3% and managed a weekly close atop its 80-week moving average for the first time in 2013.

CLOSING SUMMARY - INDICES

CLOSING SUMMARY - NYSE AND NASDAQ

A Trader's Take :

"When you consider Thursday's bounce was attributed to an article in The Wall Street Journal that said the Fed wasn't going to taper as soon as some think, it doesn't do much to add a lot of confidence," noted Detrick. "Still, next week we'll have a Fed decision on interest rates. We always hear how 'this is the most important Fed meeting in years,' but this one really just might be. Everyone and his mother knows the Fed might begin to taper their monthly bond purchases, but the big question is -- when? Hopefully Wednesday's announcement helps clear up that mystery."

3 Things to Know About Today's Market :

  • The producer price index (PPI) increased more than expected , rising 0.5% in May, the first gain in three months. Core prices -- which exclude more volatile food and energy costs -- edged just 0.1% higher. Elsewhere, the preliminary reading for this month's Thomson Reuters/University of Michigan consumer sentiment index dropped to 82.7 from 84.5 at the end of May. The reading fell short of economists' estimates, even though it was the second highest in the last eight months. (Bloomberg, Reuters)
  • The International Monetary Fund, or IMF, projected that U.S. economic growth will slow to 1.9% this year, from 2.2% in 2012. Cutting into this growth are the government's efforts to lower the federal deficit. (USA Today)
  • JPMorgan Chase (JPM) is separating itself from its only remaining private equity group, One Equity Partners. One Equity will be spun off as a separate company and assume the responsibility of raising its own funding. (The New York Times)

5 Stocks We Were Watching Today :

  1. Nokia Corporation ( NOK ) was the target of long-term call buyers, as the stock bounced higher on various news.
  2. Bearish Ford Motor (F) put buyers expect a move to multi-month lows over the intermediate term.
  3. Optimistic call traders wagered on a strong summer for T-Mobile US (TMUS) .
  4. Eleventh-hour bulls looked to pocket a quick gain in General Electric (GE) shares.
  5. Groupon Inc (GRPN) rallied sharply higher, following an upgrade from Deutsche Bank.

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 gained ground today as tensions mounted in Syria. At the close, black gold was up $1.16, or 1.2%, to $97.85 per barrel. Since last Friday's close, oil has gained roughly 1.9%.

Gold futures were also able to end the week on a positive note, thanks to the higher-than-expected PPI increase. August-dated gold added $9.80, or 0.7%, to settle the week at $1,387.60 an ounce. This is a slight gain of $4.60, or 0.3%, from one week ago.

SCHAEFFER'S MARKET POSTURE



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This article appears in: Investing , Options

Referenced Stocks: AXP , DECK , JNJ , NOK , VZ

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