"After six straight up days [in the S&P 500 Index], the
market was due for a breather," noted Schaeffer's Senior Technical
Strategist, Ryan Detrick, CMT. Indeed, the
Dow Jones Industrial Average (DJI)
consolidated lower right out of the gate. A flicker of buying power
in the final hour of trading proved to be a false start, as the
index closed below 13,200.
Continue reading for more on today's market, including
- The latest developments in the fiscal-cliff negotiations, a
recap of five newsworthy stocks, and our Tweet of the day, which
would make Rod Tidwell cry.
Dow Jones Industrial Average (DJIA)
moved lower for a second consecutive session, giving back 75
points, or 0.6%. At its lowest point of the day, it's worth noting,
the blue-chip average was off more than 98 points. Just five Dow
names managed to escape the selling. Caterpillar (
) enjoyed a 0.5% gain, leading the pack, while Merck (
) shed 2% to pace the lagging majority.
S&P 500 Index (SPX)
saw a similar pattern, slumping 9 points, or 0.6%. The
Nasdaq Composite (COMP)
, meanwhile, gave back 22 points, or 0.7%, to bring up the rear
among its sector peers. While the Dow and the SPX managed to stay
atop their 10-day moving averages, the COMP closed on the south
side of this trendline.
CBOE Market Volatility Index (VIX)
retook the 16 level today, rising 0.6 point, or 3.5%.
A Trader's Take
"There wasn't any specific reason the market dropped today,"
Detrick opined. "It was a slow news day after the Fed, but I
impressed with the solid weekly initial jobless claims number." He
continued, "We all know the concerns out there -- I'm talking to
you, fiscal cliff -- but to see initial claims under 350,000 is a
huge step in the right direction. Now the key will be... can the
number stay below this threshold?"
3 Things to Know About Today's Market
- Initial jobless claims dropped by 29,000 last week to a
seasonally adjusted annual rate of 343,000. This was better than
analysts' consensus estimate for a smaller decline to 367,000.
Meanwhile, retail sales expanded by 0.3% in November, falling shy
of the 0.5% increase expected by economists.
- As another day passed ahead of the year-end fiscal cliff
deadline, House Speaker John Boehner, R-Ohio, vocalized his
escalating frustration with President Barack Obama and other
members of the Democratic party. "Raising tax rates will hurt
small businesses," he argued, while Senate Majority Leader Harry
Reid, D-Nev, countered, "At some point, reality should set in." A
Wall Street Journal/NBC
survey revealed that 75% of Americans (and 61% of Republicans)
would stomach higher taxes to sidestep the fiscal cliff.
- Sprint Nextel (
) is willing to spend $2.1 billion to
acquire the 49% stake
in Clearwire Corporation (
) it does not already own. This is likely just a jumping-off
point for negotiations, as analysts predict CLWR shareholders
will reject the offer, which values the stock at 5% above CLWR's
... Frito-Lay -- a division of PepsiCo (PEP) -- has introduced
cola/chicken-flavored potato chips
, which are reportedly "vaguely similar to barbecue with a sugary
aftertaste." Unfortunately (or not), the novelty snack will only be
sold in China.
Today's Top Tweet
"Shorting this market must feel like being an Arizona Cardinals
fan. Someday, it's gotta happen. Right?"
5 Stocks We Were Watching Today
- Google (GOOG) call sellers hoped to
net a quick profit
using weekly options.
- Apple Inc. (AAPL) offered a
of sorts as it
brought Google Maps
back to the app store. Meanwhile, bullish options traders
- Beleaguered Zynga (ZNGA)
continues to see
bullish options activity.
upped its price target
for Visa (V) to $170 from $150 amid strong price action from the
- Walt Disney (DIS) may be
poised to climb
a "wall of worry" higher.
Question of the Day
: What does it mean if a stock is considered "hard to borrow"?
: If a stock is on the hard-to-borrow (HTB) list, it is in short
supply or can no longer be lent by brokers for short-selling
purposes. As a result, a broker's clearing firm must typically use
a third party to locate the shares. Additional fees are required
for this service, which are then passed on to the brokerage
customers. There are different reasons stocks may become hard to
borrow, including takeover situations or solvency concerns. Also,
some stocks do not have a sufficient "float" (shares available for
public trading) to allow for short selling. The list of HTB stocks
may vary by brokerage, so contact your advisor for information
regarding specific equities.
For a look at today's options movers and commodities
activity, head to page 2.
After touching a one-week high on Wednesday, January-dated crude
gave up 88 cents, or 1%, to finish at $85.89 per barrel. Gold
futures also lost ground, as the February contract dropped $21.10,
or 1.2%, to end at $1,696.80 per ounce.
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
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