Markets Simmer Near Breakeven Post-Fed

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"A day after the huge Fed-induced rally, the market rested," said Schaeffer's Senior Technical Strategist Ryan Detrick, CMT. "When you think about it, the fact that we didn't see a big post-Fed hangover and sell-off is a welcome sign. During the year, most Fed days have seen a sell-off, only to bounce back the next day. Well, this time we had some big-time strength on the Fed, but no next-day weakness. Could this be a small clue that we'll have a Santa Claus rally to end the year?" Meanwhile, the Dow Jones Industrial Average (DJI) reached a new technical milestone, and finished modestly in the black.

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

Trading Topic of the Week -- Trading Low-Priced Options: DON'T short-change yourself on time . Compared to a front-month contract, an option with six months of shelf life offers more time for the shares to move as you expect. This extra time provides you with a little breathing room to allow the predicted price move to play out.

The Dow Jones Industrial Average (DJI - 16,179.08) spent time on both sides of breakeven, but managed to touch a record intraday peak of 16,194.72 during the afternoon hours. By the time the dust settled, the Dow was up 11.1 points, or 0.1% -- marking another all-time closing high. The blue-chip bellwether's 12 advancers were led by Chevron Corporation's ( CVX ) 1.3% gain, while Microsoft Corporation ( MSFT ) and Wal-Mart Stores, Inc. ( WMT ) paced the 18 decliners with losses of 0.9% each.

The S&P 500 Index (SPX - 1,809.60) dropped to a session low of 1,801.35 this morning, but narrowed its losses to 1.1 points, or roughly 0.1%, for the day. Meanwhile, the Nasdaq Composite (COMP - 4,058.13) finished 11.9 points, or 0.3%, lower.

Elsewhere, the CBOE Volatility Index (VIX - 14.15) was parked in negative territory during the early hours of trading, but closed 0.4 point, or 2.5%, higher for the session.

CLOSING SUMMARY - INDICES

CLOSING SUMMARY - NYSE AND NASDAQ

A Trader's Take :

"Another day, and more encouraging economic data," Detrick went on. "The Philadelphia Fed and index of leading economic indicators both showed economic improvement, but the one thing I was impressed with was AK Steel Holding Corporation (AKS) upping its guidance. This sparked a big rally in steel stocks. If the economy is truly going to improve next year, sectors like steel will be big benefactors. Lastly, tomorrow is December options expiration. Remember to close out your trades, and hopefully you had some nice winners."

5 Items on Our Radar Today :

  1. The National Association of Realtors said existing home sales fell 4.3% in November to a yearly rate of 4.90 million -- marking a third consecutive monthly drop, as well as their lowest level in almost a year. Economists, on average, had expected a narrower decline. (Reuters via CNBC)
  2. According to the Labor Department, initial jobless claims climbed by a larger-than-anticipated 10,000 last week to a seasonally adjusted 379,000 -- the highest number since March. Meanwhile, the four-week moving average for first-time filings climbed 13,250 to 343,250. (MarketWatch)
  3. The Conference Board's index of leading economic indicators rose 0.8% last month, compared to a 0.1% increase in October. The latest figure -- which exceeded the consensus view -- suggests "gradually strengthening economic conditions through early 2014," according to a Conference Board economist. (Reuters) .
  4. Ford Motor Company ( F ) was hit with a round of bearish brokerage notes, following yesterday's weak 2014 outlook.
  5. One call seller predicted a near-term ceiling for Visa Inc (V) , despite today's new all-time 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 :

Crude futures advanced again, thanks to increased energy-demand forecasts. By day's end, the January contract -- which expired today -- tacked on 97 cents, or 1%, to finish at $98.77 per barrel.

Conversely, gold futures sank as investors digested the Federal Reserve's tapering plans. February-dated gold shed $41.40, or 3.4%, to end at $1,193.60 an ounce -- the lowest settlement for a most active contract since August 2010.

SCHAEFFER'S MARKET POSTURE



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: CVX , F , FB , MSFT , WMT

Schaeffer's Investment Research

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