Fed Minutes, Yellen Appointment Help Halt Selling Pressure

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"Another day, and more drama from Washington," quipped Schaeffer's Senior Technical Strategist Ryan Detrick, CMT. "Janet Yellen taking over as head of the Fed was the headline news, but in the end, today's bounce was pretty weak. Small-caps and the Nasdaq Composite (COMP) were both in the red, adding to yesterday's big drop." The Dow Jones Industrial Average (DJI) , on the other hand, closed slightly higher on the day, but well off its intraday peak.

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

plus...
    The central bank gets its first female leader, the Fed sheds some light on September's no-taper decision, and Sirius XM Radio (SIRI) sees bullish activity ahead of its earnings report.

The Dow Jones Industrial Average (DJI - 14,802.98) traded in positive territory for most of the afternoon, but pared some of its gains by the closing bell. By the time the dust settled, the blue-chip index had added 26.5 points, or 0.2%. Half of the Dow's 30 components closed higher, led by AT&T ( T ), which gained 1.9%. Bringing up the rear was Merck ( MRK ), pacing the declining 14 issues with a 1% drop. American Express ( AXP ) was unchanged.

The S&P 500 Index (SPX - 1,656.40) bounced near the 1,650 mark in late-morning trading to end up 1 point, or 0.1%. The Nasdaq Composite (COMP - 3,677.78) , however, tumbled for a third straight day, closing down 17.1 points, or 0.5%, to finish a hair below its 60-day moving average.

The CBOE Market Volatility Index (VIX - 19.60) hit an intraday peak of 21.34, but ultimately couldn't manage a second consecutive daily close above 20 -- a feat that hasn't been accomplished this year. The fear barometer ended 0.7 point lower, down 3.6%.

CLOSING SUMMARY - INDICES

CLOSING SUMMARY - NYSE AND NASDAQ

A Trader's Take :

"The Dow did find support down near its 200-day moving average today," noted Detrick. "This trendline is heavily watched and it is nice it stopped the bleeding. The Dow has been the weakest index the past few months, and it is the first one to this trendline. Nonetheless, as the saying goes, 'news trumps charts,' so while this bounce is a bit of a relief, in the end the market will remain handicapped until Washington gets its act together."

3 Things to Know About Today's Market :

  • Federal Reserve Vice Chair Janet Yellen was tapped to be the new central bank leader , with President Barack Obama making the official announcement at 3:00 p.m. Some consider Yellen to be relatively dovish on monetary policy , which could mean a slower-than-expected pullback in the Fed's asset-buying program. Assuming Congressional approval, Yellen will become the first woman to lead the Federal Reserve, following the completion of Ben Bernanke's second term. (CNBC, The New York Times)
  • Speaking of the Fed's bond-buying efforts, minutes from the Federal Open Market Committee's (FOMC) September meeting revealed that most Fed leaders still expect to start scaling back the monthly asset purchases by the end of 2013. All but one voting member, however, thought it prudent at the last meeting to wait for "more evidence" of economic health before flipping the tapering switch. (USA Today)
  • In government-shutdown developments, President Obama has invited GOP leaders to the White House in hopes of furthering a solution to the looming debt ceiling crisis. The president committed to negotiations on all terms of the budget, provided that Congress first ends the political gridlock and lifts the debt limit. (The Associated Press, via The Washington Post)

5 Stocks We Were Watching Today :

  1. Options traders have been increasingly bullish leading up to JPMorgan Chase's ( JPM ) earnings announcement this Friday.
  2. Short-term options players picked sides on Tesla Motors (TSLA) , betting on how the week will end.
  3. With its third-quarter earnings report looming at the end of the month, Sirius XM Radio (SIRI) was targeted by option bulls scooping up in-the-money calls.
  4. Yahoo! Inc. (YHOO) earned a price-target hike from B. Riley, but the brokerage bunch has far from a unanimously upbeat outlook on the search-engine firm.
  5. While Dendreon Corporation (DNDN) tests a new 11-year low, its call traders have been playing both sides of the fence.

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 :

The weekly report on crude inventories revealed a surprising increase in supplies. As a result, the November crude contract retreated $1.88, or 1.8%, to close at $101.61 per barrel. This marked the lowest settlement price for a most-active contract since early July.

Gold futures stumbled as well, even as analysts projected that the appointment of Janet Yellen as Fed chair should be a positive development for the yellow metal. By the close, December-dated gold futures were down $17.40, or 1.3%, at $1,307.20 an ounce (a one-week low).

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: AXP , FB , JPM , MRK , T

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