"Today was all about the Fed decision, which funny enough is
tomorrow," mused Schaeffer's Senior Technical Strategist Ryan
Detrick, CMT. "Nothing much happened, though, and volume was rather
light. In other words, nobody wanted to rock the boat too much
ahead of tomorrow's Federal Open Market Committee (FOMC) update.
The reality is that this is a very bullish time of year, and we all
know that. The last thing standing in the way of a strong year-end
rally is the Fed. Will the central bank rock the boat and announce
a taper? I don't expect them to taper until at least March, but
we'll have to tune in tomorrow to see for sure." Against this
Dow Jones Industrial Average (DJI)
finished slightly south of breakeven.
Continue reading for more on today's market, including
Trading Topic of the Week -- Trading Low-Priced Options:
DON'T be tempted by the cheapest options available
. It may seem like a good idea to keep your entry costs low by
purchasing the lowest-priced option available. However, bear in
mind that the cheapest contracts are most likely to expire
Dow Jones Industrial Average (DJI - 15,875.26)
spent most of the day in the red, and finished the session 9.3
points, or roughly 0.1%, lower. The blue-chip barometer's nine
advancers were led by 3M Co's (
) 2.9% gain, while a 1.5% decline for Verizon Communications Inc. (
) paced the 21 laggards.
S&P 500 Index (SPX - 1,781.00)
was also parked in negative territory throughout the session, and
shed 5.5 points, or 0.3%, by the close. Meanwhile, the
Nasdaq Composite (COMP - 4,023.68)
dropped 5.8 points, or 0.1%, on the day.
CBOE Volatility Index (VIX - 16.21)
reached an intraday high of 16.67 around 11:30 a.m. ET, but pared
its gains in the afternoon hours to end 0.2 point, or 1.1%,
A Trader's Take
"It was a nice change to catch our breath before tomorrow's
fireworks," Detrick continued. "The big thing grabbing our
attention is the action in the VIX. It has really spiked recently,
and the reason is that some traders are antsy ahead of the Fed.
This, of course, reminds us of last year, when the VIX moved higher
during December's fiscal cliff drama. Then, once that was out of
the way, all of the worry translated into buying pressure. Should
the Fed not rock the boat too much tomorrow, there is more than
enough worry out there to provide a nice end-of-the-year bounce
3 Things to Know About Today's Market
two-year budget plan
earned approval from the Senate in a 67-33 procedural vote,
pushing it another step closer to being finalized this week. "I'm
hopeful this deal can be just the first of many bipartisan deals,
that it can rebuild some of the trust and bring Democrats and
Republicans together and demonstrate that government can work for
the people we all represent," said Patty Murray (D-Wash.), who
developed the proposal with Paul Ryan (R-Wis.).
- The Labor Department said the
consumer price index (CPI)
remained unchanged in November, despite economists' projections
for a slight increase. Meanwhile, core CPI -- which excludes food
and energy costs -- climbed by a larger-than-expected 0.2%.
- The National Association of Home Builders (NAHB) revealed
housing market index
arrived at 58 in December -- up from last month's reading of 54,
and marking its highest level since August. Economists, on
average, had forecast a narrower advance.
5 Stocks We Were Watching Today
Twitter Inc (
was on the bearish analyst radar for a second straight day,
despite the stock's month-to-date gains.
- Speculators wagered on near-term support for
Molycorp Inc (MCP)
by selling to open front-month put options.
Groupon Inc (GRPN)
saw an acceleration in call volume, as one nervous trader rolled
down his bullish bet on the equity.
- Option bulls were undeterred by
Cisco Systems, Inc.'s (CSCO)
lackluster price action, and picked up longer-term calls.
Ford Motor Company (
put activity flourished amid a decline in the automaker's
European car sales last month.
For a look at today's options movers and commodities
activity, head to page 2.
Crude futures edged lower today, despite expectations for a
weekly decline in oil supplies. By the time the dust settled, the
January contract shaved off 26 cents, or 0.3%, to finish at
$97.22 per barrel.
Meanwhile, gold futures also faltered, as anxieties over
whether the Fed will announce plans to taper its asset-buying
program dragged the malleable metal lower. February-dated gold
shed $14.30, or 1.2%, to finish at $1,230.10 an ounce.
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