The
Dow Jones Industrial Average (DJI)
was fairly inert today, as investors digested news from Italy and
awaited the latest developments from the fiscal-cliff deliberations
at home. "There was very little in terms of news and even less
market action on the day," noted Schaeffer's Senior Technical
Strategist Ryan Detrick. "But although not much happened, I was
impressed by how well the U.S. held up given this morning's
weakness in European markets. There was a time European worries
would decimate U.S. markets, and it's nice to see that tide
changing," Detrick continued. "So maybe a boring day was actually a
small victory."
Continue reading for more on today's market events,
including
:
-
Chart of the Day
: What's the short-term outlook for McDonald's (
MCD
) following today's positive sales news? Senior Options
Strategist Tony Venosa, CMT, lays out
eight drivers to watch
.
-
Daily Game Plan
: Senior Trading Analyst Bryan Sapp offers some tips on how to
trade the current
calm before the FOMC storm
.
-
In Focus
:
Volatility as an asset class
-- Adam Warner details why the XIV has surged while the VXX has
struggled. Plus, could the CBOE Market Volatility Index (VIX)
stay "low" for years?
plus...
- 3 things you need to know from today's market, the session's
most notable call and put trades, and our top Tweet of the day
from the editor of
ZeroHedge
.
The
Dow Jones Industrial Average (DJIA)
made it four positive closes in a row, ending Monday's session up
15 points, or 0.1%, after spending the day in a relatively narrow
56-point range. It was an even split among the Dow 30, with 15
closing in the black while 15 settled with losses. Hewlett-Packard
(
HPQ
) blazed a trail higher, rising 2.6%, while Home Depot (
HD
) brought up the rear, down 2.2% on the day.
The
S&P 500 Index (SPX)
managed a modest gain as well, rising half a point to advance
further upon the key 1,420 level. Tech managed to keep up with the
pack, as well; the
Nasdaq Composite (COMP)
actually outperformed its peers, gaining 9 points, or 0.3%.
The
CBOE Market Volatility Index (VIX)
was higher as well, edging up 0.9%, or 0.15 point.
A Trader's Take:
"Today was what we call a coffee day," quipped Detrick. "Meaning
... you'd be better off drinking coffee than watching the market.
Nonetheless, we should see some fireworks coming later this week,
as the Fed is set to announce its decision on interest rates this
Wednesday." Detrick also noted the central bank will offer insight
into what they plan to do about the expiration of Operation
Twist.
5 Stocks We Were Watching Today
:
- Apple Inc. (
AAPL
) suffered a
$100 price-target cut
from Jefferies this morning.
- Molycorp (
MCP
) long calls were
off to a winning start
.
- Call sellers
closed a profitable position
on Microsoft Corporation (MSFT) -- and opened new near-the-money
bets.
- Weekly option bulls expect
gains from Google (GOOG)
before Friday's close.
- Option Trends: speculators have shown a recent
preference for puts
on Coinstar, Inc. (CSTR).
For a look at the top things to know about today's market --
plus options movers, commodities activity, and our top Tweet of
the day -- head to page 2.
3 Things to Know About Today's Market
:
- In Washington, budget negotiations remained at an impasse as
the fiscal cliff approaches. An aide for House Speaker John
Boehner, R-Ohio, said the GOP is holding firm as it waits for a
counteroffer from President Obama. Meanwhile, the commander in
chief told Michigan auto-plant workers that he wouldn't
compromise on higher taxes for the wealthy, as he looks to
strengthen the middle class.
- Hewlett-Packard (
HPQ
) jumped higher, fueled by rumors that high-profile investor Carl
Icahn may purchase a stake in the struggling PC company. In 2012,
HPQ has dropped roughly 45%, perhaps making the shares look like
a bargain.
- European stocks had a mixed finish after an unexpected
resignation announcement from Italian Prime Minister Mario Monti.
Monti will step down
before the completion of his term but after the nation's budget
is approved for next year. Former Prime Minister Silvio
Berlusconi -- an outspoken austerity critic -- quickly confirmed
he'd like another shot at the premiership.
Plus ...
the White House joined Pinterest under the user name
whitehouse44
, and quickly began to collect followers. The account out of 1600
Pennsylvania Ave. has only "pinned" one item so far: a picture of
first dog Bo, inviting readers to a White House Social.
Today's Top Tweet
:
"The real deadline for the Fiscal Cliff is not Dec.31, 2012, it
is the debt ceiling D-Day in March 2013"
@zerohedge,
12:09 p.m.
Question of the Day
:
Q: What is the worst-case scenario for a covered call
trade?
A: If the underlying stock rallies, the investor faces an
"opportunity loss," as any gains in the stock price are capped at
the call strike when the short option gets called away. Downside
risk, however, is unlimited down to zero as long as the investor
continues to hold the shares of the underlying stock, even after
the sold call expires.
Commodities:
Oil futures extended their swoon to a fifth consecutive day,
despite spending most of the session on positive ground. Crude for
January delivery gave up 37 cents, or 0.4%, to finish at $85.56 per
barrel. This marked the contract's lowest close since Nov. 15.
Gold, on the other hand, capitalized on its safe-haven status to
close up for a third straight session. The February contract gained
$8.90, or 0.5%, to end at $1,714.40 per ounce.
At the end of every market day, the staff at Schaeffer's
Investment Research reviews the trading day in detail, covering
major events and key market developments. Don't miss this
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