Dow Battles for a Win as Fed-Induced Excitement Wanes

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The Dow Jones Industrial Average (DJI) rallied more than 140 points during this morning's highly anticipated speech by Federal Reserve Chairman Ben Bernanke before Congress. However, as the day wore on, things took a downturn and the lion's share of these gains was pared by the closing bell. "After yesterday's huge rally, it was nice that we didn't quickly give back all of those gains," stated Schaeffer's Senior Technical Strategist Ryan Detrick. "On the other hand, it was a peculiar day as small caps and tech stocks significantly lagged their big-cap brothers. Couple this with the financial weakness, and I think it's safe to say we still have a very jittery market."

Keep reading to see what else was on our radar today:

  • Three contrarian ideas from the pharmaceuticals sector: AGN, PFE, and PRGO.
  • A crack in the safe: big banking firms could see bigger deficits .
  • Plus, did the bears get trapped by the SPX's bounce?
And now, a look at the numbers...

CLOSING SUMMARY - INDICES

CLOSING SUMMARY - NYSE AND NASDAQ


The Dow Jones Industrial Average (DJI - 12,460.96) weathered a 138-point swing today -- from a session peak of 12,555.26 to a late-session low of 12,416.53 -- to land with a 46.2-point, or 0.4%, gain by the time the dust settled. Sixteen of the 30 blue-chips closed higher, as United Technologies ( UTX ) led the outperformers with a 2.4% jump. Bank of America ( BAC ) paced the 13 laggards with a 2.9% loss, while Johnson & Johnson ( JNJ ) remained unchanged.

The S&P 500 Index (SPX - 1,314.99) also saw a very up-and-down session, but ultimately inched fractionally lower by the closing bell. Meanwhile, the Nasdaq Composite (COMP - 2,831.02) mirrored the SPX's performance, and settled with a larger 13.7-point, or 0.5%, loss.

The CBOE Market Volatility Index (VIX - 21.72) continued its recent decline, notching its fourth down day in a row. The VIX fell nearly 2% lower and ended well above its session low of 20.74, and just atop its 32-day moving average.

Today's highlight : "China got things started with the surprise rate cut this morning, but Fed. Chairman Ben Bernanke didn't give much of a hint one way or the other regarding any quantitative easing (QE3) or a continued Operation Twist -- and by the end of the day we were well off the highs," said Detrick. "Also, it's worth noting that financials significantly lagged all day, finishing in the red and near their lows."

Turning to today's major market stories...

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

Oil futures couldn't keep their three-day streak of wins alive, and ultimately took a hit today following Federal Reserve Chairman Ben Bernanke's decision to not take immediate action to stimulate the economy. But Bernanke did say the central bank is "prepared to take action" should the economy dry up. By the close, July-dated crude pulled back 20 cents, or 0.2%, to end at $84.82 a barrel.

Gold futures took a dive today on an unexpected rate cut in China and Ben Bernanke's somewhat vague comments about future monetary stimulus. Gold for August delivery lopped off $46.20, or 2.8%, to land at $1,588.00 an ounce.

Levels to Watch in Trading :

  • Dow Jones Industrial Average (DJI - 12,460.96) - support at 11,500; resistance at 14,000

  • S&P 500 Index (SPX - 1,314.99) - support at 1,100; resistance at 1,500

  • Nasdaq Composite (COMP - 2,831.02) - support at 2,400; resistance at 3,400

OUTPERFORMING AND UNDERPERFORMING SECTORS

STOCKS - MOVERS

STOCKS - EARNINGS

STOCKS - NOTABLE CALL ACTIVITY

STOCKS - NOTABLE PUT ACTIVITY

For today's notable annual highs and lows, click here .

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: BAC , JNJ , JNPR , SINA , UTX

Schaeffer's Investment Research

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