"The market has had a nice run and it needed something to spark
the selling ... well, today it was the Fed minutes," said
Schaeffer's Senior Technical Strategist Ryan Detrick, CMT, of
today's trading. The
Dow Jones Industrial Average (DJI)
fell below 14,000 after hitting a five-year high in early trading,
plummeting on the possibility that the Federal Reserve's bond
buyback program may be ending. "The consensus was the minutes
revealed the Fed might stop the stimulus a little earlier than
expected. This led to some heavy selling across the board."
Continue reading for more on today's market, including
- Schaeffer's Senior Options Strategist Tony Venosa, CMT,
gives eight reasons
why Green Mountain Coffee Roasters (
) is a good candidate for a long trade.
- Schaeffer's Senior Trading Analyst Bryan Sapp on how
"weakness in materials names and homebuilders"
weighed on today's indexes.
- Why online radio provider Pandora (
a lot of attention
from optimistic option traders.
- The Fed isn't totally united, the markets react with a bit of
a dive, and how good news for The Boeing Company (
) didn't help the airplane maker in the option pits.
The day got off to a slow start for the
Dow Jones Industrial Average
, with disappointing new housing data setting the stage. Then the
latest Federal Reserve minutes -- which showed division over the
bank's bond buyback program -- led to a deeper selloff, with the
Dow closing at 13,927.54, down 108 points, or 0.8%, after hitting a
five-year high of 14,058.27 in mid-morning trading. Only six of the
30 companies on the Dow advanced, led by drug maker Merck & Co.
), which climbed 1%. The 24 decliners were led by Alcoa (
), which dropped 3.3%.
S&P 500 Index (SPX)
also fell, dropping nearly 19 points, or 1.2%, to close at
1,511.95. The index did stay above the 1,500 mark for the 11th
consecutive session. The
Nasdaq Composite (COMP)
fell 49 points, or 1.5%, to finish at 3,164.41.
CBOE Volatility Index (VIX)
closed at 14.68, jumping 2.4 points, or 19.3%, to close above 14
for the first time since Feb. 4.
A Trader's Take
"We were due for a pullback eventually, since the market can't
go up forever," Detrick said. "My big concern is that small-caps
and technology were hit very hard. Anytime those two areas lag like
today, that is concerning for the overall strength of the
3 Things to Know About Today's Market
- Minutes from the Jan. 29-30 Federal Open Market Committee
revealed mixed opinion
regarding the central bank's bond-buying program known as QE
(quantitative easing). Some officials expressed concern about
ongoing risks associated with the program, including possible
- New residential home construction
last month as compared with the previous year, according to the
U.S. Commerce Department -- and the seasonally adjusted annual
rate of 890,000 new home starts was down from December's
multi-year high of 973,000.
- The U.S. Labor Department reported that producer prices
rose by 0.2% in January
on a seasonally adjusted basis, the reading's first increase
5 Stocks We Were Watching Today
- Airplane maker The Boeing Company (
) got some good news today, but it wasn't enough to
bet on an upturn
for MGM Resorts International (MGM) after the company released
its quarterly earnings this morning and announced a special
- Chesapeake Energy Corporation (CHK) was the target of
looking for a dip following Thursday's earnings release.
- Ford Motor Company (F) option traders discounted the recent
stock drop and bet that shares would
by early 2015.
- Akamai Technologies (AKAM) slid on the stock charts and
option traders bet
that the share price would continue to fall into next month.
For a look at today's options movers and commodities
activity, head to page 2.
Crude futures finished lower on Wednesday -- oil for April
delivery, which assumed front-month status after the close, ended
on a dip of $1.88, or 1.9%, at $95.22 per barrel.
The rising U.S. dollar continued to put downward pressure on
gold, with the April contract dropping $26.20, or 1.6%, to finish
the day at $1,578 per ounce -- its lowest close since July 12.
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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