Markets Take a Breather from Yesterday's Fed-Induced Rally

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"After yesterday's massive late-day rally, most of the major sectors took a little breather, and results were fairly mixed today," observed Schaeffer's Senior Equity Analyst Joe Bell, CMT. "The initial jobless claims number came in at 309,000, but the computer glitches with California and Nevada seem to be causing some of the same issues we saw with these figures for the past few weeks." Meanwhile, the Dow Jones Industrial Average (DJI) pulled back slightly from Wednesday's record high to close in negative territory.

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

  • Schaeffer's Senior Trading Analyst Bryan Sapp reflects on today's "post-Fed simmer," and notes which area should act as support for the S&P 500 Index (SPX).
  • Which Internet giant could be poised for near-term losses, according to our Senior Options Strategist Tony Venosa, CMT? Tune in to his Chart of the Day column to find out.
  • This week's Short Interest Update highlights three outperforming stocks that could end up benefiting from increased skepticism on the Street.
plus...
    Existing home sales hit a multi-year high, JPMorgan Chase ( JPM ) admitted to trading misdeeds, and Groupon ( GRPN ) soared on some bullish brokerage attention.

The Dow Jones Industrial Average (DJI - 15,636.55) spent just a small amount of time in the black this morning, and eventually sank to an intraday low of 15,625.45 during the afternoon hours. By the close, the blue-chip bellwether was down 40.4 points, or 0.3% -- its first losing session in five. Home Depot ( HD ) led the Dow's eight advancers with a gain of 1.5%, while UnitedHealth ( UNH ) paced the laggards yet again with a loss of 3%.

The S&P 500 Index (SPX - 1,722.34) followed a similar path, but managed to tag yet another record intraday high of 1,729.86 early in the session. By the closing bell, however, the index was down 3.2 points, or 0.2%. Meanwhile, the Nasdaq Composite (COMP - 3,789.38) fared the best of its peers, advancing 5.7 points, or 0.2%, and reaching -- once again -- its highest point in almost 13 years.


Elsewhere, the CBOE Market Volatility Index (VIX - 13.16) dropped right out of the gate, and remained south of breakeven for the entire session to finish 0.4 point, or 3.2%, lower on the day. The "fear barometer" is in danger of finishing a second consecutive week south of its 20-week moving average.

CLOSING SUMMARY - INDICES

CLOSING SUMMARY - NYSE AND NASDAQ

A Trader's Take :

"The Nasdaq was the clear leader today, as Apple ( AAPL ) had a pretty nice day after its recent poor price action," continued Bell. "Given the notable run up by all the major sectors this month, it's not too surprising that we had a day like this."

3 Things to Know About Today's Market :

  • The National Association of Realtors said existing home sales climbed 1.7% in August to a seasonally adjusted yearly rate of 5.48 million, compared to July's unrevised rate of 5.39 million. This latest figure not only exceeded consensus estimates, but also marked the highest level since February 2007. (MarketWatch)
  • The Conference Board revealed that its Leading Economic Index (LEI) rose by a larger than expected 0.7% last month to a reading of 96.6, versus July's increase of 0.5%. "If the LEI's six-month growth rate, which has nearly doubled, continues in the coming months, economic growth should gradually strengthen through the end of the year," noted a Conference Board economist. (CNBC)
  • In an effort to move past the now infamous "London Whale" drama, JPMorgan Chase ( JPM ) agreed to cough up around $920 million for violating federal securities laws. The firm failed to adequately inform both its board and regulators regarding trading losses at its CIO unit, which is responsible for helping to reduce risk and oversee excess deposits. (Bloomberg)

5 Stocks We Were Watching Today :

  1. Groupon ( GRPN ) scored an upgrade at Stifel Nicolaus this morning, on the heels of some M&A news.
  2. Pessimistic traders have been pummeling Electronic Arts (EA) , despite the stock's upward trajectory.
  3. Weaker-than-expected guidance prompted William Blair to initiate lukewarm coverage of Oracle (ORCL) .
  4. A new high for Sirius XM Radio (SIRI) triggered a flurry of bullish options activity, with a focus on October calls.
  5. Front-month speculators predicted extended upside for Barrick Gold (ABX) , amid the stock's Fed-induced rally.

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 declined today, as yesterday's downwardly revised economic forecast from the Fed sparked anxieties over energy demand. By the time the dust settled, October-dated crude fell $1.68, or 1.6%, to end at $106.39 per barrel.

On the other hand, gold futures notched their largest daily gain since March 2009, thanks to the central bank's decision to maintain its current bond-buying program. Gold for December delivery gained $61.70, or 4.7%, to end at $1,369.30 an ounce -- its highest close in almost two weeks.

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: AAPL , GRPN , HD , JPM , UNH

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