Day One After the Storm, U.S. Stocks Fizzle

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Shaking off the weather-related two-day lapse in trading, the Dow Jones Industrial Average (DJI) endured a rather up-and-down session, dipping to a slim loss at the closing bell. "The market opened up without a hitch and trading resumed just fine," noted Schaeffer's Senior Technical Strategist Ryan Detrick. "But while we came out of the gate with higher prices, the market eventually sold off once again. We've noted how price action is rather bearish, while various sentiment indicators are flashing extreme levels of skepticism. This doesn't mean we will bottom and rally, but it does improve the odds of a stellar rally on any good news," said Detrick. "Now, we just need some good news."

Chart of the Day : Schaeffer's Senior Options Strategist Tony Venosa, CMT, shares 8 reasons to go long on Yum! Brands ( YUM ) .

Daily Game Plan : Schaeffer's Senior Trading Analyst Bryan Sapp has the levels to watch and news to follow in tomorrow's trading.

And now, a look at the numbers...

CLOSING SUMMARY - INDICES

CLOSING SUMMARY - NYSE AND NASDAQ

The markets see-sawed throughout the session, starting the day with moderate gains as investors enthusiastically returned from a two-day trading break. By lunchtime, however, stocks were in negative territory, only to pop back near breakeven shortly before the close. It was ultimately a mixed and uninspiring finish, as the Dow was just shy of breakeven, the S&P 500 Index (SPX) closed fractionally higher, and the tech-rich Nasdaq Composite (COMP) gave back roughly 0.4%. For the month, the Dow retreated 2.5%, the SPX shed 2%, and the COMP brought up the rear with a 4.5% drop.

The CBOE Market Volatility Index (VIX), meanwhile, rallied sharply on the day and surged 18.2% for the month. The index continues to drift below its 20-month moving average, however, which has contained all but one monthly close since last November.

Today's highlight : "You have to hand it to both Ford ( F ) and General Motors ( GM ), as both soared on some nice earnings. Still, earnings across the board have been rather disappointing," said Detrick.

"Nonetheless, the mergers and acquisitions activity continues to show there are some great values out there. First off, Walt Disney (DIS) bought Lucasfilm for more than $4 billion, making George Lucas the second-largest holder of DIS shares." Detrick continued, "Then, PVH Corp. (PVH) paid a 38% premium, or $2.9 billion, for Warnaco (WRC). Things are scary and the economy continues to weaken, but most of that is factored in. EVERYONE knew this earnings season would be bad. I'm more encouraged by the fact we continue to see M&A activity for some huge premiums."

More of today's big stories:

And, in case you missed it ... Four outperforming credit services names that are poised to charge higher .

For today's activity in commodities, options, and more, head to page 2.

Commodities markets:

Oil posted an advance on the day, rising 56 cents, or 0.7%, from yesterday's final settlement to close at $86.24 a barrel. October was a rough spell for black gold, which surrendered 6.5% during the month for its second straight monthly decline.

December gold futures moved higher on Wednesday as well, climbing $7, or 0.4%, to $1,719.10. For the month of October, however, the yellow metal dropped 3.1%, breaking its four-month winning streak.

Levels to watch in trading...

  • Dow Jones Industrial Average (DJI - 13,096.46) - support at 11,500; resistance at 14,000
  • S&P 500 Index (SPX - 1,412.16) - support at 1,100; resistance at 1,500
  • Nasdaq Composite (COMP - 2,977.23) - support at 2,400; resistance at 3,400

OUTPERFORMING AND UNDERPERFORMING SECTORS

STOCKS - MOVERS

STOCKS - EARNINGS

STOCKS - NOTABLE CALL ACTIVITY

STOCKS - NOTABLE PUT ACTIVITY

SCHAEFFER'S MARKET POSTURE

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 critical, timely and insightful report. If you enjoyed today's edition of Market Recap, sign up here for free daily delivery straight to your inbox.



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

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


This article appears in: Investing , Options

Referenced Stocks: F , FB , GM , V , YUM

Schaeffer's Investment Research

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