Markets Little Changed Ahead of Fed Update

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"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 backdrop, the Dow Jones Industrial Average (DJI) finished slightly south of breakeven.

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

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The 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 ( MMM ) 2.9% gain, while a 1.5% decline for Verizon Communications Inc. ( VZ ) paced the 21 laggards.

The 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.

Elsewhere, the 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%, higher.

CLOSING SUMMARY - INDICES

CLOSING SUMMARY - NYSE AND NASDAQ

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 higher."

3 Things to Know About Today's Market :

  • A 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.). (USA Today)
  • 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%. (MarketWatch)
  • The National Association of Home Builders (NAHB) revealed that its 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. (Reuters)

5 Stocks We Were Watching Today :

  1. Twitter Inc ( TWTR ) was on the bearish analyst radar for a second straight day, despite the stock's month-to-date gains.
  2. Speculators wagered on near-term support for Molycorp Inc (MCP) by selling to open front-month put options.
  3. Groupon Inc (GRPN) saw an acceleration in call volume, as one nervous trader rolled down his bullish bet on the equity.
  4. Option bulls were undeterred by Cisco Systems, Inc.'s (CSCO) lackluster price action, and picked up longer-term calls.
  5. Ford Motor Company ( F ) put activity flourished amid a decline in the automaker's European car sales last month.
  6. 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 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.

    SCHAEFFER'S MARKET POSTURE



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This article appears in: Investing , Options

Referenced Stocks: F , HLF , MMM , TWTR , VZ

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