Dow, S&P 500 Erase Friday's Momentum on Lackluster Data

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"It was an incredibly slow news day," noted Schaeffer's Senior Technical Strategist Ryan Detrick, CMT. "The bulls were in control, and then late-day worries regarding Syria sparked some selling. The end of August is usually a light volume, choppy mess. Today was exactly that, and there's a good chance we'll see more days like this the rest of the week." Meanwhile, a disappointing durable goods report rubbed salt in the proverbial wounds, all of which led the Dow Jones Industrial Average (DJI) to finish firmly in the red.

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

  • Schaeffer's Senior Trading Analyst Bryan Sapp reminds traders to "never short a dull market," and offers up a neutral spread strategy for Caterpillar ( CAT ).
  • The latest edition of The Week Ahead highlights upcoming events for an Internet company, a global delivery service, and an alternative energy firm.
  • Bearish speculators took advantage of Bank of America's ( BAC ) relatively cheap option prices by scooping up short-term puts to wager on a downturn.
plus...
    Durable goods orders declined in July, Amgen ( AMGN ) bought out one of its sector peers, and LinkedIn ( LNKD ) touched a new all-time peak.

The Dow Jones Industrial Average (DJI - 14,946.46) was able to ward off data-induced losses for a large portion of the day, but dropped abruptly to an intraday low of 14,945.24 during the last hour of trading. By the close, the blue-chip barometer was off 64.1 points, or 0.4%. Home Depot ( HD ) led the four advancers with a 2.1% gain, while Procter & Gamble (PG) paced the 26 decliners with a loss of 1.8%.

The S&P 500 Index (SPX - 1,656.78) also managed to trek higher throughout the first half of the day, before tumbling to a session low of 1,656.02 just ahead of the close. In the end, the index lost 6.7 points, or 0.4%. Meanwhile, the Nasdaq Composite (COMP - 3,657.57) edged 0.2 point, or 0.01%, lower.

Elsewhere, the CBOE Market Volatility Index (VIX - 14.99) took the opposite path by trending lower in the morning, and then spiking to an intraday high of 15.01 later in the session. On the day, the "fear gauge" gained 1 point, or 7.2%.

CLOSING SUMMARY - INDICES

CLOSING SUMMARY - NYSE AND NASDAQ

A Trader's Take :

"Today was more of the same, as blue chips trailed and tech stocks led," continued Detrick. "The Dow has lagged significantly recently, but the Nasdaq is close to a new 52-week high. Small-caps have also held up better on the recent dip. The big question is, who is right?"

3 Things to Know About Today's Market :

  • The Commerce Department said durable goods orders fell by 7.3% in July, which exceeded consensus estimates for a drop of just 4%. This latest figure -- which reflects the largest monthly decline in almost a year -- comes on the heels a 3.9% increase in June. Excluding transportation, orders slipped by 0.6%. (CNBC)
  • The Dallas Fed reported that its general business activity index rose to 5.0 this month, up from July's reading of 4.4. Although a number of subindexes were sluggish last month, the latest figure was boosted by a surge in the employment index, which arrived at 11.2 -- its highest reading in 52 weeks. (Nasdaq)
  • In M&A news, Amgen ( AMGN ) inked a deal to buy Onyx Pharmaceuticals (ONXX) for about $10.4 billion over the weekend. The cash buyout values ONXX -- maker of Kyprolis, a blood cancer drug -- at approximately $125 per share, and is expected to be finalized in the beginning of the fourth quarter. (MarketWatch)

5 Stocks We Were Watching Today :

  1. Microsoft (MSFT) scored a price-target hike following news of CEO Steve Ballmer's impending retirement.
  2. Near-term traders focused on AT&T's (T) October series of puts once again, with hopes for further losses.
  3. Sentiment surrounding General Electric (GE) has been bullishly skewed lately, despite recent technical woes.
  4. Outperforming LinkedIn ( LNKD ) -- which tagged a new record high today -- continues to attract option bears.
  5. Pessimistic speculators remained enamored with Chesapeake Energy (CHK) , as September put volume soared.

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 :

Crude oil futures faltered today, following this morning's weaker-than-expected durable goods report. By the time the closing bell rang, October-dated oil shaved off 50 cents, or 0.85%, to settle at $105.92 per barrel.

Meanwhile, the same data weighed on gold futures, although the precious metal did manage to briefly ascend past $1,400 an ounce earlier in the day. Still, December-dated gold shed $2.70, or 0.2%, to finish at $1,393.10 an ounce.

SCHAEFFER'S MARKET POSTURE



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.

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This article appears in: Investing , Options

Referenced Stocks: AMGN , BAC , CAT , HD , LNKD

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