Markets Fight Their Way to a Gain as Earnings Season Begins

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"Once again, we had a 'buy the dip' mentality, as we finished near the highs of the day," noted Schaeffer's Senior Technical Strategist Ryan Detrick, CMT. Trading volume was light ahead of the start of earnings season, but the Dow Jones Industrial Average was able to slowly fight its way out of the red and close with a respectable gain. "There wasn't any major news driver worth talking about," Detrick added, "but it is worth noting that the S&P 500 Index (SPX) now has been up/down/up/down for 14 straight days! If that doesn't sum up a frustrating market, I don't know what does."

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

plus...
  • Markets fight back despite light volume, Great Britain loses its Iron Lady, and Yahoo! ( YHOO ) attracts put buyers.

The Dow Jones Industrial Average , started its day in losing territory, but slowly and steadily fought its way higher despite low volume and a lack of major news drivers. By the close, the Dow had added 48 points, or 0.3%, to 14,613.48 -- its intraday peak. Of the Dow's 30 components, 21 moved higher today, led by Bank of America ( BAC ), which gained 2%. Bringing up the rear was Johnson & Johnson (JNJ), which paced the nine decliners following a brokerage downgrade .

The S&P 500 Index (SPX) made similar late-session headway, closing up 9.8 points, or 0.6%, at 1,563.07. The tech-rich Nasdaq Composite (COMP) cruised to a positive finish also, adding 18 points, or 0.6%, to settle at 3,222.25.

The CBOE Market Volatility Index (VIX) endured a contrasting trajectory, starting the day solidly in the black only to unravel in the final hours of trading. By the closing bell, the VIX was off 0.7 point, or 5.2%, at 13.19.

CLOSING SUMMARY - INDICES

CLOSING SUMMARY - NYSE AND NASDAQ

A Trader's Take :

"Tonight begins earnings season," exclaimed Detrick. "Alcoa (AA) kicks things off tonight as they are the unofficial 'first company' to report earnings. What stands out about this earnings season is that overall, expectations are rather low. This is actually a repeat of the past two years -- analysts lower their expectations drastically ahead of the results, then earnings come in a little better than expected, and we rally."

3 Things to Know About Today's Market :

  • General Electric (GE) is spending north of $3 billion, or $88.50 per share, to acquire Lufkin Industries (LUFK) , a manufacturer of oilfield equipment. The deal works into GE's long-term goal of investing in companies that are a good fit with GE's industrial operations. (USA Today)
  • Eyes were on Alcoa (AA) today, as the aluminum name will cut the ribbon on first-quarter earnings season tonight. Analysts are expecting results of 8 cents per share, according to Thomson Reuters. Overall earnings across S&P 500 companies are expected to expand 1.6%, down from 6.2% in the fourth quarter of 2012. (CNBC)
  • Margaret Thatcher, the first (and so far, the only) female British Prime Minister, died at the age of 87 . More than 20 years ago, she scoffed at the idea of a single currency across Europe, telling Forbes , "Every single fixed exchange rate has cracked in the end." (Forbes)

5 Stocks We Were Watching Today :

  1. As Cisco Systems (CSCO) edged lower, short-term call sellers descended.
  2. Apple Inc. (AAPL) bulls emerged once again , buying out-of-the-money calls that expire this Friday.
  3. Short-term bears targeted Netflix, Inc. (NFLX) today, despite the stock's impressive year-to-date gain.
  4. Yahoo! Inc. ( YHOO ) saw activity at its out-of-the-money put strikes , as some speculators may have scooped up portfolio protection.
  5. Chipotle Mexican Grill (CMG) earned a price-target hike and advanced to a six-month high.

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 :

Oil futures bounced higher today, reversing Friday's loss as geopolitical tensions heated up. At the close, May crude futures had gained 66 cents, or 0.7%, at $93.36 per barrel.

Hurt by a stronger dollar, meanwhile, gold suffered its fourth loss in five sessions even as billionaire investor George Soros opined that central banks will be likely to keep buying the precious metal. June-dated gold futures closed at $1,572.50 an ounce, off $3.40, or 0.2%.

SCHAEFFER'S MARKET POSTURE

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This article appears in: Investing , Options

Referenced Stocks: AMD , BAC , INTC , NKE , YHOO

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