"After the 1,740 level held on the S&P 500 Index for the
past few days, the bulls finally got to have some fun," quipped
Schaeffer's Senior Technical Strategist Ryan Detrick, CMT. "If
there was one problem, it was that volume was a little light.
Still, with the monthly jobs data out tomorrow, it makes sense that
traders weren't making any huge bets. The S&P 500 is right back
up against those December lows, which held as support in late
January. So that level won't go down without a fight." Meanwhile,
Dow Jones Industrial Average (DJI)
gapped higher out of the gate and never looked back, closing with a
solid triple-digit gain.
Trading Topic of the Week
Continue reading for more on today's market, including
-- Reasons to Dodge Directional Risk:
Capitalize on expected volatility spikes
. There are several technical and sentiment indicators that can
tell you whether a stock is on the verge of some major volatility
-- including Bollinger Bands and high levels of short interest.
Dow Jones Industrial Average (DJI - 15,628.53)
was in rebound mode today, adding 188.3 points, or 1.2%, by the
close to end just shy of its intraday peak. All but three of the
Dow's components ended in positive territory, with The Walt Disney
) leading the charge, up 5.3%. AT&T Inc. (T) paced the three
decliners, down 0.3%.
S&P 500 Index (SPX - 1,773.43)
also bounced 1.2% higher today, rising 21.8 points. The
Nasdaq Composite (COMP - 4,057.12)
rallied 45.6 points, or 1.1%, muscling back above its 80-day moving
CBOE Volatility Index (VIX - 17.23)
spiraled 2.7 points, or 13.6%, lower today. Since Monday's close,
the "fear gauge" has lost more than 19% of its value.
A Trader's Take
"The bleeding has stopped, and when you consider just how
quickly everyone got bearish, you have to like that," noted
Detrick. "The American Association of Individual Investors (AAII)
poll came out, and bulls were at their lowest level since April!
Various other polls and put/call ratios are showing levels
consistent with previous bottoms. Now, that doesn't mean we have to
bottom, but it does set us up for some continued strength. Lastly,
I'm really closely watching that 1,775 area on the S&P 500 --
site of its December lows. It would make sense that this area
provides some resistance. Still, should the bulls push things again
tomorrow after the jobs data -- and with some volume to boot --
that could form a very nice-looking bear trap. Everyone got all
'beared up' once 1,775 broke, then just as quickly are now
vulnerable to losses on their short positions. We saw that
mentality multiple times last year. Yes, this is a new year and it
is anything but last year given the way it started, but the bar is
much lower than it was a month ago -- that is for sure."
5 Items on Our Radar Today
- Initial jobless claims declined by 20,000 to 331,000 during
the week ended Feb. 1. Economists were projecting a slightly
smaller pullback in first-time applications for
. Elsewhere, productivity among U.S. employees rose at an
annualized rate of 3.2% in the fourth quarter, exceeding
- Dow component The Walt Disney Company (
) bounced higher today following
strong fiscal first-quarter earnings news
. Strength in its movie studio division -- which scored a huge
holiday hit with
-- helped lift net income and revenue solidly above analysts'
(The New York Times)
- A look at how American corporate sponsors are dealing with a
challenging Winter Olympics backdrop
- Call buyers flocked to
Yahoo! Inc. (YHOO)
options pits to place long-term bets on continued upside.
Micron Technology, Inc. (MU)
tagged a new historical high, one conservative spread trader took
For a look at today's options movers and commodities
activity, head to page 2.
Oil futures moved higher for the third consecutive session, as
upbeat news on the employment front supported improved
energy-demand forecasts. March-dated crude futures added 46 cents,
or 0.5%, to end the session at $97.84 per barrel.
Gold futures gained ground as well, despite a sluggish start.
April-dated gold edged 30 cents higher on the day to settle at
$1,257.20 an ounce.
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