Markets End Lower as the Street Waits for Answers

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"One thing we've seen this year is that every dip has been aggressively bought," noted Schaeffer's Senior Technical Strategist Ryan Detrick, CMT. "The longest losing streak in 2013 was just four days, set last month (and matched today). We're getting near the end of the month and quarter, so there is always a chance for some late-quarter buying. Still, with talk of a potential government shutdown coming up soon, there is always a chance for some news-induced volatility on the horizon." Meanwhile, as debt-ceiling negotiations raged on in Washington, the Dow Jones Industrial Average (DJI) closed solidly in the red.

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

  • Schaeffer's Senior Trading Analyst Bryan Sapp discusses the Russell 2000's (RUT) new all-time high , as well as his expectations for the S&P 500 Index (SPX).
  • In his latest Chart of the Day , Senior Options Strategist Tony Venosa, CMT, lists 12 reasons why bulls should keep an eye on Questcor Pharmaceuticals ( QCOR ).
  • This week's installment of Option Trends takes a closer look at recent trading activity on these three former Dow components.
plus...
    Home prices edged higher in July, Applied Materials ( AMAT ) announced plans to merge with a Japan-based rival, and option bears ignored Baidu's ( BIDU ) new high.

The Dow Jones Industrial Average (DJI - 15,334.59) had a bit of a roller coaster ride today, as it trended lower during the morning hours of trading, then cruised higher in the early afternoon. By the close, however, the blue-chip barometer was down 66.8 points, or 0.4% -- just above its session low of 15,327.14. The Dow's nine advancers were led by Boeing's ( BA ) 1.3% gain, while JPMorgan Chase ( JPM ) paced the 21 laggards with a decline of 2.2%.

The S&P 500 Index (SPX - 1,697.42) experienced some choppy price action of its own, touching an intraday low of 1,694.90 within the first hour of the session, and then rising to an intraday high of 1,707.63 just before 2:00 p.m. ET. By the end, it was the same story, with the index finishing 4.4 points, or 0.3%, lower -- and below the key 1,700 level. Meanwhile, the Nasdaq Composite (COMP - 3,768.25) "outperformed" its peers, adding 3 points, or 0.1%, on the day.


Elsewhere, the CBOE Market Volatility Index (VIX - 14.08) spent most of the session in the red, and closed 0.2 point, or 1.6%, lower.

CLOSING SUMMARY - INDICES

CLOSING SUMMARY - NYSE AND NASDAQ

A Trader's Take :

"Housing had some good news, as both Lennar (LEN) and KB Home (KBH) reported strong earnings," Detrick went on. "It is interesting, because yields took a big dip today, and long-term bonds had a positive session. At the same time, the dip in yields could be a good sign for housing, as it sparked a big rally within this sector."

3 Things to Know About Today's Market :

  • A pair of housing reports hit the Street today, with both showing monthly and year-over-year gains. The S&P/Case-Shiller 20-city home price index climbed 1.8% in July, and 12.4% during the past year -- the latter marking its quickest annual pace since 2006. Meanwhile, the Federal Housing Finance Agency (FHFA) said home prices increased by a seasonally adjusted 1% in July, and advanced 8.8% from the year-ago period. (MarketWatch)
  • The Conference Board revealed that its consumer confidence index fell to a lower-than-expected 79.7 in September -- its weakest level since May -- from last month's reading of 81.8. Additionally, the gauge for measuring expectations over the next six months dropped to 84.1 from a reading of 89. The declines were attributed to growing anxieties regarding unemployment and limited wage increases, which could have an impact on consumer spending. (Bloomberg)
  • Applied Materials ( AMAT ) shares surged today, after the firm announced plans to merge with Tokyo Electron . The all-stock deal will result in a new company worth $29 billion, although it will retain two separate listings on the Nasdaq and Tokyo Stock Exchange. Once the deal is complete, AMAT shareholders will own roughly 68% of the new company, while those owning Tokyo Electron stock will make up the remaining 32%. (CNBC)

5 Stocks We Were Watching Today :

  1. Apple (AAPL) scored a round of bullish brokerage notes, despite the security's technical struggles.
  2. Option bears were undeterred by Baidu's ( BIDU ) new annual high, and picked up front-month puts.
  3. Call volume spiked on JetBlue Airways (JBLU) , but one block trader may have been a skeptic in disguise.
  4. A closer look at uptrending Netflix (NFLX) shows a bearishly skewed sentiment backdrop.
  5. A price-target hike at J.P. Morgan Securities triggered some positive price action for Starbucks (SBUX) .

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 declined for a fourth straight day, as hopes for diplomatic solutions with Syria and Iran weakened oil prices. By the closing bell, November-dated crude edged down 46 cents, or 0.4%, to finish at $103.13 per barrel.

Meanwhile, gold futures also fell, as renewed tapering concerns weighed on the precious metal. Gold for December delivery dropped $10.70, or 0.8%, to close at $1,316.30 an ounce.

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.

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


This article appears in: Investing , Options

Referenced Stocks: AMAT , BA , BIDU , JPM , QCOR

Schaeffer's Investment Research

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