Stocks Bounce Back After Lockhart Remarks

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"Once again, we saw early selling pressure met with a flood of buying, as markets finished well off their intraday lows," said Schaeffer's Senior Equity Analyst Joe Bell, CMT. "There wasn't a whole lot of news today, as earnings season is winding down, and many people are awaiting the next Fed meeting." Likewise, the Dow Jones Industrial Average (DJI) recovered from earlier losses to finish solidly in the black.

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

  • Schaeffer's Senior Trading Analyst Bryan Sapp points out a potential "head and shoulders" pattern forming on the S&P 500, and offers up a bearish trading idea for Amazon.com ( AMZN ).
  • This week's Option Trends covers three commodity stocks with heavy option volume and contrarian trading potential.
  • Uptrending QUALCOMM ( QCOM ) attracted a bevy of front-month bulls, as well as one bearish put-spread strategist.
plus...
    Investors were somewhat assuaged by a Fed official's comments, a proposed merger between US Airways ( LCC ) and AMR Corporation hit a snag, and Cisco Systems ( CSCO ) scored a price-target hike ahead of earnings.

The Dow Jones Industrial Average (DJI - 15,451.01) dropped to an intraday low of 15,342.34 within the first hour of trading, but managed to claw its way into the green to finish 31.3 points, or 0.2%, higher. Hewlett-Packard's ( HPQ ) 2.1% gain -- which was triggered by a bullish brokerage note -- led the Dow's 16 advancers, while Alcoa (AA) and Microsoft (MSFT) paced the 14 decliners, each losing 1.3%.

Likewise, the S&P 500 Index (SPX - 1,694.16) rebounded from its session lows, tacking on 4.7 points, or 0.3%, by the close. Meanwhile, the Nasdaq Composite (COMP - 3,684.44) also ended in positive territory, advancing 14.5 points, or 0.4%.


The CBOE Market Volatility Index (VIX - 12.31) rose to an intraday high of 13.37 this morning, but ended the session 0.5 point, or 3.9%, lower.

CLOSING SUMMARY - INDICES

CLOSING SUMMARY - NYSE AND NASDAQ

A Trader's Take :

"Although most of earnings season is finished, many large retailers are set to report their results tonight, which should garner a lot of attention," Bell continued. "Consumer discretionary names have been incredibly strong, and it will be interesting to see if they can maintain their momentum."

3 Things to Know About Today's Market :

  • Wall Street found a bit of comfort in Dennis Lockhart's speech today, even though the Atlanta Fed president admitted that the central bank could start to taper current stimulus measures within the next few meetings. However, he also noted, "I don't expect to have enough data to be sure of my outlook [in September]. For that reason, I don't think a decision that commits the Fed to a full phase-out of asset purchases and lays out a precise, beginning-to-end path for doing so would be advisable." (Bloomberg)
  • The Commerce Department said retail sales rose by a weaker-than-expected 0.2% in July, due largely to a significant drop in auto sales. Still, the latest figure marked a fourth consecutive monthly increase. Excluding autos, sales climbed by 0.5%. (MarketWatch)
  • A proposed $11-billion merger between US Airways ( LCC ) and AMR Corporation is being challenged by the Justice Department and a handful of state attorneys general, but the two companies aren't giving up without a fight. In a joint statement, LCC and the American Airlines' parent said, "We will mount a vigorous defense and pursue all legal options in order to achieve this merger and deliver the benefits of the new American to our customers and communities as soon as possible." (CNBC)

5 Stocks We Were Watching Today :

  1. Canaccord Genuity upwardly revised its price target for Cree (CREE) ahead of tonight's quarterly earnings report.
  2. First Solar's (FSLR) front-month series of options attracted both call and put players, amid today's negative price action.
  3. As Wall Street awaits the latest iPhone debut, Apple (AAPL) near-term traders scooped up August calls.
  4. Bearish speculators continued to zero in on AK Steel (AKS) , and wagered on extended losses by December expiration.
  5. Northland Capital raised its price target for Cisco Systems ( CSCO ) ahead of tomorrow's post-close turn in the earnings confessional.

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 oil futures climbed for a third straight day, buoyed by anxieties regarding oil exports from Libya, as well as expectations of a decline in tomorrow's crude inventories report. By the close, September-dated crude added 72 cents, or 0.7%, to settle at $106.83 per barrel.

Conversely, gold futures snapped a four-day winning streak, due to a stronger dollar and lingering concerns over when the Fed will scale back its bond-buying program. The December-dated contract shed $13.70, or 1%, to end at $1,320.50 an ounce.

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: AMZN , CSCO , HPQ , LCC , QCOM

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