Markets Extend Losing Streak as Tapering Anxieties Grow


"The Dow Jones Industrial Average (DJI) and S&P 500 Index (SPX) dropped for the fifth day in a row, tying the longest losing streak this year, which was set back in September," noted Schaeffer's Senior Technical Strategist Ryan Detrick, CMT. "With the monthly payroll data due out tomorrow morning, traders maintained a rather cautious outlook ahead of the widely anticipated report. The media will claim the drop was due to better-than-expected gross domestic product stats and weekly jobless claims. The thinking is that better economic data is bad, because it means the Fed will taper sooner. Well, the other side to that argument is that the SPX has been up eight weeks in a row, and some selling is more than acceptable."

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

    Gross domestic product (GDP) grew faster than expected in the third quarter, weekly jobless claims dropped to their lowest level since September, and J.C. Penney Company, Inc. ( JCP ) slumped on investor-related news.

The Dow Jones Industrial Average (DJI - 15,821.51) stumbled right out of the gate, and ended up shedding 68.3 points, or 0.4%, by the end of the session. Intel Corporation ( INTC ) led the Dow's 10 advancing blue chips with a gain of 2.2%, while sector peer Microsoft Corporation ( MSFT ) paced the 20 decliners with a loss of 2.4%. JPMorgan Chase & Co. ( JPM ) also surrendered 2.4% on the day.

The S&P 500 Index (SPX - 1,785.03) also faltered at the opening bell, and lost 7.8 points, or 0.4%, by the close. Meanwhile, the Nasdaq Composite (COMP - 4,033.16) shed 4.8 points, or 0.1%, on the day.

Elsewhere, the CBOE Volatility Index (VIX - 15.08) ended the session 0.4 point, or 2.6%, higher, marking its loftiest close since mid-October.



A Trader's Take :

"As I said above, the economic data was pretty good," reiterated Detrick. "Now the big one, the monthly jobs numbers, comes out tomorrow. I still say I'd rather see better-than-expected economic data and get this tapering started. Nevertheless, be ready for a good deal of volatility in all asset classes tomorrow. Good luck."

3 Things to Know About Today's Market :

  • Atlanta Fed President Dennis Lockhart noted during a speech in Fort Lauderdale, Fl. that if the central bank decides to scale back its asset-buying program, a size limit and timetable should be implemented, as well. "If and when the [Federal Open Market Committee] arrives at a decision to wind down asset purchases, it's my view that it will be helpful to the transition process to provide as much certainty as possible about how this will be done," said Lockhart, a known backer of the Fed's accommodative policy. (Bloomberg)
  • The Commerce Department said gross domestic product (GDP) grew at an annualized rate of 3.6% for the third quarter -- up from the 2.8% pace that was previously reported, and ahead of economists' average forecast. (Reuters via CNBC)
  • Initial jobless claims fell by 23,000 last week to 298,000 -- according to the Labor Department -- surprising economists who were expecting a rise in the reading. Meanwhile, the four-week moving average for first-time filings dropped by 10,750 to 322,250. Both figures were the lowest since September. (MarketWatch)

5 Stocks We Were Watching Today :

  1. Trader sentiment remains bearishly biased toward Netflix, Inc. (NFLX) , despite its outperformance on the charts.
  2. Advanced Micro Devices, Inc. (AMD) experienced a surge in call activity, but some of these speculators may have been hedging short sellers.
  3. Shares of J.C. Penney Company, Inc. ( JCP ) tumbled amid some investor news, which may have triggered a jump in put buying.
  4. Front-month call players descended upon AT&T Inc. (T) in droves, following a pair of headlines this morning.
  5. Technical heavyweight Yahoo! Inc. (YHOO) lured option bears to the trading table, who wagered on near-term losses.


For a look at today's options movers and commodities activity, head to page 2.



Commodities :

Crude futures eked out another gain today, as a pair of positive economic reports bolstered energy demand forecasts. By the closing bell, the January contract edged up 18 cents, or 0.2%, to finish at $97.38 per barrel -- extending its daily winning streak to five.

Conversely, the same economic data dragged gold futures lower, with February-dated gold falling $15.30, or 1.2%, to finish at $1,231.90 per ounce.


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: AAPL , INTC , JCP , JPM , MSFT

Schaeffer's Investment Research

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