Markets Drop On European Fears

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"Oracle ( ORCL ) had a much worse-than-expected earnings report and issued cautious growth guidance," said Schaeffer's Senior Equity Analyst Joe Bell as the overall market struggled and the Dow Jones Industrial Average (DJI) fell on fears from Europe. "While most major sectors finished in the red, this poor earnings news led to notable underperformance from the tech sector throughout the day."

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

  • Schaeffer's Senior Options Strategist Tony Venosa, CMT, explains why Potash Corp./Saskatchewan (NYSE:POT ) is a strong candidate for a short trade.
  • Our Senior Trading Analyst Bryan Sapp on the ugly response by the markets to strong economic data today; plus, a deep dive into the downturn by Intel Corporation ( INTC ).
  • And bearish option traders looked for the recent drop by International Business Machines ( IBM ) to continue over the short term.
plus...
  • The markets get spooked by European concerns, jobless claims rise -- albeit slowly, and how short-term option traders swarmed Cisco Systems ( CSCO ) today.

The Dow Jones Industrial Average (DJI) fell off after setting a new record high yesterday, with investors scared off by gloomy forecasts out of Europe. The Dow dropped 90 points, or 0.6%, to finish at 14,421.49. The 30-member Dow saw only five of its members advance, led by The Coca-Cola Company ( KO ), which climbed 0.5% and led advancers for the second-straight day. The 25 decliners were paced by Cisco Systems ( CSCO ), which fell 3.8%.

The S&P 500 Index (SPX) also fell, dropping nearly 13 points, or 0.8%, to close at 1,545.80. The Nasdaq Composite (COMP) finished at 3,222.60, down nearly 32 points, or 1.0%.

The CBOE Market Volatility Index (VIX) gained 1.3 points, or 10%, to close at 13.97.

A Trader's Take :

"Beneath the sea of red, we actually had some pretty encouraging jobs data released this morning," Bell noted. "Initial claims of 336,000 were better than expected, and it marked the fourth week that this figure came in below the 350,000 level."

CLOSING SUMMARY - INDICES

CLOSING SUMMARY - NYSE AND NASDAQ

3 Things to Know About Today's Market :

  • New jobless claims rose slightly this week to 336,000 according to the U.S. Labor Department, but the four-week moving average remained at its lowest levels since before the Great Recession. (CNNMoney)
  • Widely viewed as a key economic indicator overseas, a German purchasing managers' index surprisingly fell , sparking a selloff on European markets. (Bloomberg Businessweek)
  • And Sears Holdings Corp. (SHLD) signed its CEO Edward Lampert to a contract with an annual salary of $1. But Lampert doesn't really come that cheaply; the deal gives him the ability to make up to $2 million in cash/stock as a bonus and up to $4.5 million worth of SHLD shares each year. (CBS Money Watch)

5 Stocks We Were Watching Today :

  1. Short-term option bets were the plays of the day for Cisco Systems ( CSCO ).
  2. Citigroup (C) drew out short-term bears as it fell on the charts today.
  3. Lululemon Athletica (LULU) kept bulls on its side despite its recent supply troubles and a recall announcement.
  4. Short-term bears also targeted NIKE (NKE), looking for a slide after tonight's earnings results.
  5. Bullish traders bet on a positive earnings result from Oracle Corporation ( ORCL ), but might be rethinking that strategy after last night's release.

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 :

Demand expectations for oil dropped Thursday due to uncertainty over Cyprus and the previously mentioned European manufacturing data. That pushed oil futures lower -- crude for May delivery dropped $1.05, or 1.1%, to end at $92.45 per barrel.

But that same Cyprus situation sparked gold futures higher, with investors looking for a safe haven. April-dated gold jumped $6.30, or 0.4%, to finish at $1,613.80 per ounce -- a three-week closing high for the precious metal.

SCHAEFFER'S MARKET POSTURE

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 critical, timely and insightful report. If you enjoyed today's edition of Market Recap, sign up here for free daily delivery straight to your inbox.



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.

All Rights Reserved. Unauthorized reproduction of any SIR publication is strictly prohibited.


This article appears in: Investing , Options

Referenced Stocks: CSCO , IBM , INTC , KO , ORCL

Schaeffer's Investment Research

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