Stocks Close Mixed Ahead of Fed Minutes

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"While the S&P 500 Index (SPX) edged modestly higher today, the Dow Jones Industrial Average (DJI) sold off into the close, extending its losing streak to five days," said Schaeffer's Senior Technical Strategist Ryan Detrick, CMT. "This is nothing more than an oversold bounce at this point. The bears have taken control during the historically bearish month of August, and today did little to change that." Ahead of tomorrow's release of the latest Federal Open Market Committee (FOMC) meeting minutes, the major averages finished mixed, with the Dow hovering just above the 15,000 mark.

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

  • While Schaeffer's Senior Trading Analyst Bryan Sapp sees the potential for future gains, he notes that a retaking of 1,675 on the S&P 500 is "the major test" in terms of a more solid recovery.
  • The latest installment of Option Trends highlights three retail stocks that have seen accelerated options trading of late.
  • Short-term bulls converged on Netflix ( NFLX ) amid reports of an extended licensing agreement with a major film studio.
plus...
    The Chicago Fed's National Activity Index improved in July, Home Depot ( HD ) trumped earnings expectations, and Zynga ( ZNGA ) was on Wall Street's bearish radar.

The Dow Jones Industrial Average (DJI - 15,002.99) sank to an intraday low of 14,992.16 -- its first violation of the 15,000 level since July 5 -- within the first 30 minutes of the session. Despite reversing course later in the day, the blue-chip index still ended up closing 7.8 points, or 0.1%, lower. Intel ( INTC ) led the Dow's 14 advancers with a gain of 1.1%, while Home Depot ( HD ) paced the 15 laggards with a loss of 1.2%. DuPont ( DD ) remained unchanged.

The S&P 500 Index (SPX - 1,652.35) also spent some time south of breakeven this morning, but managed to finish with a gain of 6.3 points, or 0.4%. Meanwhile, the Nasdaq Composite (COMP - 3,613.59) added 24.5 points, or 0.7%.

The CBOE Market Volatility Index (VIX - 14.91) fell to a session low of 14.29 earlier this afternoon, but narrowed its daily loss to 0.2 point, or 1.3%, by the closing bell.

CLOSING SUMMARY - INDICES

CLOSING SUMMARY - NYSE AND NASDAQ

A Trader's Take :

"Some strong earnings out of the retail sector sparked today's bounce," noted Detrick. "Last week's earnings from Cisco Systems (CSCO) and Wal-Mart (WMT) prompted the big 200-plus-point drop last Thursday, so some positive news on the retail front was a nice change. Still, tomorrow is the release of the Fed minutes, and any chance to get into Ben Bernanke's head will be greeted with much hoopla and a lot of excitement. Are they tapering? Aren't they tapering? Tune in tomorrow for the answers, or potentially just more questions."

3 Things to Know About Today's Market :

  • The Federal Reserve of Chicago said its National Activity Index arrived at negative 0.15 in July. Although this latest figure was up from June's reading of negative 0.23, it still fell short of the consensus view. A reading below zero signals below-average economic growth across the nation. (Bloomberg)
  • Home Depot ( HD ) reported a second-quarter profit of $1.80 billion, or $1.24 per share, up from $1.53 billion, or $1.01 per share, in the year-ago period. Meanwhile, revenue jumped by 9.5% to $22.5 billion. Analysts were expecting per-share earnings of $1.21 on sales of $21.8 billion. HD also raised its full-year outlook to $3.60 per share from $3.52. (Reuters)
  • Asian markets had a rough day , experiencing extended losses across the board. Some of the "highlights": Japan's Nikkei finished at an almost two-month low, while South Korea's Kospi dropped to a one-week low. In terms of emerging markets, Indonesia's Jakarta Composite entered bear market territory following its 4.5% decline, and has shed 22% since touching a record high in May. (CNBC)

5 Stocks We Were Watching Today :

  1. Jefferies upped its price target for Salesforce.com (CRM) ahead of next week's quarterly earnings report.
  2. EMC Corporation (EMC) traders bet on continued resistance for the stock by selling to open front-month calls.
  3. One cautious shareholder constructed a collar on Bank of America (BAC) to guard against extended declines.
  4. Zynga ( ZNGA ) was slapped with a "sell" rating, as the stock tries to recover from last month's earnings-induced drop.
  5. Bullish sentiment toward Amazon.com (AMZN) has been on the rise lately, both in and out of the options arena.

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 settled lower for a second straight session, pressured lower by ongoing stimulus anxieties. By the close, September-dated oil -- which expired today -- shed $2.14, or 2%, to end at $104.96 per barrel.

Conversely, gold futures finished higher -- notching their eighth advance in 10 days -- thanks to a promising demand outlook in Asia. The December-dated contract gained $6.90, or 0.5%, to close at $1,372.60 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.

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This article appears in: Investing , Options

Referenced Stocks: DD , HD , INTC , NFLX , ZNGA

Schaeffer's Investment Research

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