Markets Finish a Volatile Day Modestly Higher

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"The market got off to a very strong start at the open, but most major sectors finished well off their intraday highs," noted Schaeffer's Senior Equity Analyst Joe Bell, CMT. "Many participants thanked the lack of military action against Syria over the holiday weekend for the bounce, but that situation continues to linger over the market." Nevertheless, the Dow Jones Industrial Average (DJI) managed to finish the session north of breakeven.

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

  • Our founder and CEO, Bernie Schaeffer, explains what traders can learn from VIX call volume spikes .
  • Schaeffer's Senior Trading Analyst Bryan Sapp opines that the "markets are setting up for a push lower," despite today's blip higher on Syria-related developments .
  • This week's edition of Short Interest Update highlights three uptrending stocks that could benefit from increased skepticism.
plus...
    The ISM's purchasing managers index (PMI) rose in August, construction spending hit a multi-year high, and Vodafone ( VOD ) inked a deal with Verizon Communications ( VZ ).

The Dow Jones Industrial Average (DJI - 14,833.96) soared to an intraday high of 14,777.48 almost right out of the gate this morning, but pared its gains throughout the session to close just 23.7 points, or 0.2%, higher, after spending much of the afternoon below breakeven. The blue-chip index's 16 advancers were led by United Technologies' ( UTX ) climb of 2.6%, while the 14 decliners were paced by Microsoft's ( MSFT ) 4.6% loss.

The S&P 500 Index (SPX - 1,639.77) charted a similar path as the Dow, and gained 6.8 points, or 0.4%. Meanwhile, the Nasdaq Composite (COMP - 3,612.61) advanced 22.7 points, or 0.6%.

Conversely, the CBOE Market Volatility Index (VIX - 16.61) dropped to an intraday low of 16.11 this morning, but narrowed its losses to 0.4 point, or 2.4%, by the closing bell.

CLOSING SUMMARY - INDICES

CLOSING SUMMARY - NYSE AND NASDAQ

A Trader's Take :

"There were two big deals this morning, as Microsoft ( MSFT ) and Verizon Communications ( VZ ) both had major acquisitions," Bell pointed out. "Unfortunately for the Dow, these two blue-chip components reacted negatively, which directly caused the big-cap index to lag the market."

3 Things to Know About Today's Market :

  • The Institute for Supply Management's (ISM) manufacturing purchasing managers index (PMI) arrived at 55.7 last month -- up from July's figure of 55.4, and besting economists' projections for a reading of 54.0. This latest figure marked the index's highest level since mid-2011. (Reuters)
  • The Commerce Department said construction spending climbed 0.6% in July to an annual rate of $900.8 billion, marking a four-year high. This latest gain -- which exceeded consensus estimates for an increase of 0.4% -- comes on the heels of June's nearly flat reading. (Bloomberg)
  • Vodafone ( VOD ) agreed to sell its 45% stake in Verizon Wireless to -- you guessed it -- Verizon Communications ( VZ ) for approximately $130 billion in cash and stock. This makes the latter the largest wireless carrier in the U.S. (USA Today)

5 Stocks We Were Watching Today :

  1. Despite the stock's lackluster price action in 2013, AT&T ( T ) scored an upgrade at Macquarie this morning.
  2. One Solar Winds (SWI) speculator placed a neutral-to-bullish bet on the security by selling front-month puts.
  3. Traders converged on Nokia (NOK) , after the firm announced plans to sell its handset business to Microsoft ( MSFT ).
  4. Southwest Airlines (LUV) saw a surge in longer-term bullish options activity, with a particular focus on the March series of calls.
  5. Weekly bulls pounced on Cisco Systems (CSCO) , scooping up calls in hopes of a trek higher over the next two weeks.

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 gained ground on Tuesday, as rising manufacturing in China and the U.S. suggested a positive forecast for future energy demand. By the close, October-dated oil had risen 89 cents, or 0.8%, to settle at $108.54 per barrel.

Gold futures also advanced -- for the first session in four -- due in part to continued uncertainty regarding Syria and a strike among evening-shift workers at South African gold mines. The yellow metal rose $15.90, or 1.1%, to close at $1,412 an ounce.

SCHAEFFER'S MARKET POSTURE



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This article appears in: Investing , Options

Referenced Stocks: MSFT , T , UTX , VOD , VZ

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