Dow, S&P 500 Manage to Snap Losing Streaks Amid Mixed Data

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"Similar action today from the previous days, and that isn't good," said Schaeffer's Senior Technical Strategist Ryan Detrick, CMT. "In the end, the five-day losing streak is over, but the afternoon selling left a lot to be desired. If there is one positive, it's that volume hasn't been all that impressive during the recent market weakness. Of course, price is what pays, and it has been disappointing. With a potential government shutdown coming, traders are taking a wait-and-see approach." Against this backdrop, Dow Jones Industrial Average (DJI) managed to close solidly north of breakeven.

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

  • Schaeffer's Senior Options Strategist Tony Venosa, CMT, lists seven reasons why Walt Disney ( DIS ) could be poised for a run higher in his latest Chart of the Day .
  • This week's edition of Small-Cap Standout takes a closer look at three outperforming but underloved stocks with upside potential.
  • One trader bet on a layer of support to hold up against any post-earnings backlash for this outperforming automaker .
plus...
    Debt-ceiling negotiations in Washington continued to stall, pending home sales fell for a third straight month, and Bed Bath & Beyond's ( BBBY ) well-received quarterly earnings report prompted a round of bullish brokerage notes.

The Dow Jones Industrial Average (DJI - 15,328.30) spiked notably higher right out of the gate, tagging an intraday high of 15,387.19 within the first hour of trading. By the close, however, the blue-chip index pared its gains to 55 points, or 0.4% -- snapping its five-day losing streak. Nike ( NKE ) led the Dow's 21 advancers with a gain of 2.1%, while Cisco Systems ( CSCO ) paced the nine laggards with a decline of 2.7%.

The S&P 500 Index (SPX - 1,698.67) experienced some similar price action, peaking at a session high of 1,703.85 earlier this morning. By the closing bell, the index was 5.9 points, or 0.4%, higher -- and thus ending its own losing streak. Meanwhile, the Nasdaq Composite (COMP - 3,787.43) climbed 26.3 points, or 0.7%.

Elsewhere, the CBOE Market Volatility Index (VIX - 14.06) dropped at the sound of the opening bell, but gained ground throughout the day to finish up 0.1 point, or 0.4%.

CLOSING SUMMARY - INDICES

CLOSING SUMMARY - NYSE AND NASDAQ

A Trader's Take :

"Hey, the losing streak is over -- that's good news," said Detrick. "Also, the action in small-caps and tech stocks continues to hold tough. With the quarter nearly over, it is worth noting that the Nasdaq is up more than 11% since the end of June. (I'd say rather quietly, too.) Sure, the S&P 500 has gone virtually nowhere since the May peak, but under the surface, small-caps and tech stocks have done very well. I continue to think that bodes well for a big fourth quarter, as funds chance performance and put cash to work. It's just a matter of time until that can take place, though. We need to work out this Washington drama first."

3 Things to Know About Today's Market :

  • Budget negotiations in Washington continued to hit a brick wall today, as President Barack Obama reiterated his commitment to raising the debt ceiling. However, House Speaker John Boehner (R-Ohio) insisted that such a move isn't possible without implementing considerable spending cuts. "I am sorry, it just doesn't work that way," he said during a press conference. He also noted that the House is proposing a bill that would marry a debt-ceiling increase with cuts in government spending. (MarketWatch)
  • The Commerce Department said its final second-quarter gross domestic product (GDP) reading remained unchanged from last month's estimate of 2.5%. Although the latest figure was an improvement over the first quarter's growth rate of 1.1%, it was still slightly shy of the consensus view. Consumer spending -- which represents around 70% of the economy -- increased 1.8%, staying flat with the previous estimate. (Bloomberg)
  • The National Association of Realtors revealed that pending home sales fell a larger-than-expected 1.6% in August, marking a third consecutive monthly decline. The drop was attributed to a notable rise in mortgage rates, as the number of contracts to purchase previously owned homes declined across most of the U.S., save the Northeast region. (Reuters)

5 Stocks We Were Watching Today :

  1. A stronger-than-expected quarterly earnings report triggered a slew of price-target hikes for Bed Bath & Beyond ( BBBY ) .
  2. Option bears set their sights on AT&T ( T ) , and scooped up the telecom concern's longer-term puts.
  3. Yahoo! (YHOO) saw a heavy influx of options activity, with the stock's longer-term calls and weekly puts receiving notable attention.
  4. One bullish speculator showed his confidence in Groupon (GRPN) by constructing a long call spread on the daily deals name.
  5. Our Option Idea of the Week explains why Genworth Financial (GNW) could benefit from heavy skepticism on the Street.

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 futures ended a five-session losing streak, following today's mixed bag of economic data. By the close, November-dated crude tacked on 37 cents, or 0.4%, to finish at $103.03 per barrel.

However, the same reports weighed on gold futures, while a number of investors watched for signs of a potential government shutdown -- a development that could spark some "safe haven" bids. Gold for December delivery lopped off $12.10, or 0.9%, to end at $1,324.10 an ounce.

SCHAEFFER'S MARKET POSTURE



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This article appears in: Investing , Options

Referenced Stocks: BBBY , CSCO , DIS , NKE , T

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