Dow Ends Near Intraday Peak; Budget Drama Fails to Stall the Bulls

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The Dow Jones Industrial Average (DJI) still managed to gain ground today, even with budget talks at a temporary standstill. While there were several economic data points hitting the newswires, "overall, it was another slow day ahead of the upcoming holidays," quipped Schaeffer's Senior Equity Analyst Joe Bell.

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

plus...
  • A big change on Wall Street, a pre-earnings option strategy in Research in Motion ( RIMM ), and a young trader shares some wise words in our Tweet of the day.

The Dow Jones Industrial Average (DJIA) bounced around breakeven for much of the morning, but committed to positive territory in early afternoon trading after testing support at its 10-day moving average. The blue-chip average closed just off its intraday peak with a 60-point gain, up 0.5%. Just five of the Dow's 30 names were in negative territory by the close, led by Merck ( MRK ) , which shed 3.4% on disappointing news from its cholesterol drug trial. Pacing the 25 advancers was Bank of America ( BAC ), up nearly 3% today.

The S&P 500 Index (SPX) closed back above the familiar 1,440 level, up 7.9 points, or 0.6%. Elsewhere, the Nasdaq Composite (COMP) finished near breakeven, gaining six points, or 0.2%, on the day.

The CBOE Market Volatility Index (VIX) moved higher as well, however, tacking on 1.8%, or 0.31 point.

CLOSING SUMMARY - INDICES

CLOSING SUMMARY - NYSE AND NASDAQ

A Trader's Take :

"This morning, jobs data was in line with expectations, and housing data was a little better than expected. We also got our daily dose of fiscal-cliff news from Washington," recapped Bell. "The market is still holding its gains from early this week, though, and even managed to trade higher for much of today's session. We've rallied more than 7% from our November low," he pointed out, "and the bulls continue to be resilient as we head into the end of the year."

3 Things to Know About Today's Market :

  • Market watchers had several pieces of economic news to digest today, starting with the final gross domestic product (GDP) number for the third quarter. The figure expanded by 3.1%, topping economists' estimates and surpassing the preliminary estimate. Elsewhere, initial jobless claims increased by 17,000 last week -- matching expectations -- and existing home sales rose 5.9% in November to reach a three-year high.
  • It's the end of an era, as the Big Board -- its own boss for roughly two centuries -- has been sold to a Southern upstart. The 12-year-old IntercontinentalExchange ( ICE ), headquartered in Atlanta, is paying $8.2 billion in cash and stock to acquire NYSE Euronext (NYX) at a 38% premium from its Wednesday closing price. The newly formed company will have two headquarters -- in New York and Atlanta -- and at its helm will be ICE Chairman/CEO Jeffrey Sprecher and NYX CEO Duncan Neiderauer, who will move into the role of president.
  • On the fiscal-cliff front, the Republican-led House will vote tonight on a bill backed by House Speaker John Boehner, R-Ohio, which effectively keeps tax cuts in place for those making up to $1 million per year. Passage in the Senate is unlikely, however, and President Obama has threatened to veto the measure. In his latest vocal salvo, Boehner declared, "President Obama and Senate Democrats haven't done much of anything [to ensure a budgetary compromise before the end of the year] ... I did my part," but did add that he anticipates working further with the president toward a solution.

Plus ... Boeing (BA) found a suitable proxy for an airplane full of warm human passengers -- 20,000 pounds of Idaho's finest. Specifically, the aerospace company used 20,000 pounds of potatoes to test the effectiveness of in-flight WiFi. A BA spokesperson asserts the spuds' "interactions with radio-wave signals mimic those of the human body."

Today's Top Tweet :

"At this point, unless a politician says something really dramatic (re: fiscal cliff), markets have become desensitized when they speak $$"
@TheArmoTrader, 10:19 a.m.

5 Stocks We Were Watching Today :

  1. Hours before earnings, Research in Motion ( RIMM ) strategists initiated a collar trade .
  2. Under Armour (UA) speculators project limited downside over the next several months.
  3. Option bulls continued to add positions on Ford Motor (F).
  4. Merck's ( MRK ) pullback today inspired short-term traders to buy puts .
  5. FedEx (FDX) scored a brokerage upgrade after yesterday's positive earnings report.

STOCKS - EARNINGS

Question of the Day :

Q : What is "triple witching?"
A : Triple witching happens four times a year, on expiration Friday during the last month of each quarter. In other words, this phenomenon occurs on the third Friday of March, June, September, and December. On this day, stock index futures, stock index options, and equity options all expire, often prompting increased volatility, particularly during the final hour of the trading day.

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 kept moving higher amid wintry weather, with February futures closing up 15 cents, or 0.2%, at $90.13 per barrel. Gold futures took a step back, however, with February-dated gold losing $21.80, or 1.3%, to settle at $1,645.90 an ounce.

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 , ICE , MRK , RIMM , ZNGA

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